This article is a guest contribution from a conference in July 2023, that the CPC hosted together with the Near East South Asia Center of the National Defense University (NDU), “Connecting Central Asia, the South Caucasus and Beyond”.

The Caspian region, Central Asia and the Caucasus, is a geopolitically interdependent region that has assumed enormous strategic importance in recent years. In this interconnected area, the distinction between pro-Western or Russian-oriented governments has often been less striking because many countries have enjoyed strong defence ties with Russia while at the same time improving coordination and strategic connections with NATO. They are increasing their defence expenditures and are constantly improving their military infrastructure with help from many traditional and new partners. Defence cooperation is emerging between these governments and several Asian neighbours, including China, India, and even Pakistan. All of this cooperation is driven by existing and emerging threats to regional security – violent extremism, religious terrorism, drug trafficking, and strategic competition between the United States and Russia. The Caspian Sea is also becoming the most significant sector of the North–South and East–West transcontinental transport systems, and India is keen to reap the benefits of this development.

While Russia is the biggest naval power in the Caspian, the recent decline of Russian power coupled with the aggressive rise of China has opened some new dimensions for India’s security and national interests. India’s foremost security challenge is China, which is also being recognised as a strategic threat to the rules-based international order. India’s contest with China is not only confined to the boundary dispute, but also encompasses many regions. Therefore, India has been continuously expanding its maritime and continental security through greater security collaboration with the United States. India is also pursuing bilateral, trilateral, and mini-lateral engagements with states that have considerable stakes in its stability, security, and economic growth. Growing outreach to the Greater Caspian region and specifically to the Central Asian states is an important pillar of contemporary Indian diplomacy. 

Being traditionally committed to the concept of ‘non-alignment,’ India has now come to adopt the idea of a ‘multi-polar’ world. India has been trying to raise its global profile, while positioning itself as the true voice of the Global South. A large number of India’s foreign policy objectives are geared towards creating opportunities for its economic growth and securing its interests. However, despite being a strong advocate of a multi-polar world, India does not accept the Chinese version of a multi-polar world that is based on hostility with the West. India has firmly resisted any attempt by either Beijing or Moscow to recruit developing countries to their anti-West campaign on behalf of the Global South. 

It is China’s increasingly aggressive behaviour in the Indo-Pacific region that has propelled India’s inclusion into the America-led Indo-Pacific architecture. Therefore, India’s engagement with the Greater Caspian region impinges on China’s aims for regional hegemony and seeks to deter it from using its political influence as a diplomatic weapon. India has both economic and geostrategic challenges and opportunities in the Greater Caspian Region that are listed below. 

Opportunities

Geopolitical Significance: In order to dismantle the rather simplistic and dominant realist conception of the Caspian Sea region, it is important to understand that factors such as the role of outside actors, shared interests, political preferences, identities, and principles are not fixed; they are prone to change with new circumstances. Therefore, the Caspian Sea region should not be viewed as a geopolitical battleground, because this view hides vital layers of a more complex reality. Having said this, India’s geopolitical influence will grow as a result of its increased involvement in the Greater Caspian Region. India can advance its strategic interests in the Caspian region by having closer ties with countries like Kazakhstan, Iran, Turkmenistan, and Azerbaijan. India is trying to collaborate with the United States, EU countries, Japan, and others that have a mutual interest in countering China’s growing hegemonic influence in the region. 

Energy Security: With the rising domestic demand, India has become one of the largest consumers of energy. The increasing energy needs of the Indian economy make it a promising market for Caspian energy exports. By engaging with regional countries, India can secure a more varied and reliable source of energy. Fortifying regional economic linkages and making use of the region’s hydrocarbon deposits are some of the primary objectives of India. New Delhi is already a significant investor in Kazakhstan’s oil and gas industry. Some of India’s important oil and gas investments in this region include Satpayev block (ONGC), Kashagan oilfield (ONGC), and Atyrau Refinery (IOCL). 

Connectivity and Trade: The region acts as a connector for several trade and transport corridors, for instance, the International North-South Transport Corridor (INSTC) and the Ashgabat Agreement. India’s participation in these endeavours would improve its connectivity in the neighbouring countries, Europe, and Russia, providing access to hitherto inaccessible markets. India has been exploring opportunities for collaborations and investments in infrastructure projects to improve transport links and expand the route across Uzbekistan, Tajikistan, Kyrgyzstan, and Kazakhstan by connecting major urban hubs.

Infrastructure projects: India’s experience in the field of infrastructure development could be helpful in the expansion of the Caspian Sea region’s pipelines, ports, trains, and other transportation projects. In turn, this could provide several lucrative openings for Indian businesses to take part in infrastructure development. 

Agriculture and food processing: The Caspian area offers a lot of potential for agriculture and food processing, given its abundant land resources. Modern farming methods, food processing facilities, and refrigerated storage facilities are all areas where India would like to invest. This has the potential to boost agricultural output and enhance food security.

Mining and minerals:  The Caspian region is very rich in mineral resources that include gold, iron ore, uranium, and copper. Mining, mineral exploration, and mineral processing are all viable business opportunities for Indian investors. Collaboration in these areas can promote regional economic expansion and enable India to fulfill its rising mineral demand.

Healthcare and pharmaceuticals:  India has a thriving pharmaceutical industry that might potentially benefit from investing in the healthcare sector in this region. This includes setting up pharmaceutical factories, healthcare facilities, and R&D hubs to serve the domestic market and to expand into international markets.

Digitalization and IT: The Greater Caspian region is experiencing digital transformation, creating openings for Indian investment in areas like software development, information technology, and digital services.

Combating terrorism: Key security challenges in the region include extremism, terrorism, and organised crime. Therefore, regional cooperation against these threats is necessary.

Challenges 

Russia, China, and European countries have been some of the key actors seeking influence in the Caspian region. In view of intensifying Great-Power competition, there might be hurdles for India in negotiating complex geopolitical relations and protecting its own strategic interests. India will have to develop new patterns of cooperative mechanisms to compete with China’s Belt and Road Initiative (BRI).

Recently, Russian President Vladimir Putin announced that Russia would build a railway line connecting Iran along the North-South Trade Corridor (NSTC) – a corridor that connects India to Russia via Iran and Azerbaijan. NSTC is in sync with India’s participation in the Ashgabat Agreement, and it gives India access to the Persian Gulf and the Central Asian markets. While this would have been a positive development for India’s foreign trade policy in the region, the chaos of Russia’s Ukraine war and Moscow’s rising dependence on Beijing will only make things more complicated for India. China and Russia have already forged a ‘no-limits’ friendship, supporting each other on various global issues as they seek to counter American influence. China’s closer embrace of Vladimir Putin, as opposed to India’s principled Russian stance based on national interests, is not something Moscow appreciates.

Another issue is the growing political alignment between Azerbaijan and Pakistan, although there has been some romanticism that Azerbaijan holds for Indian scholars and policymakers. Centuries before, Indians were involved in trade with the Caspian region. In particular, Indian merchants from undivided Punjab had huge commercial connections with Baku. India’s cultural remnants in Azerbaijan are still quite a sight to behold, and a particular mention may be made of Baku’s Ateshgah, also known as the ‘Fire Temple... It is a multi-religious temple that was most likely used as a Hindu, Sikh, and Zoroastrian place of worship. 

India’s growing diplomatic bonhomie with Armenia is as much a bone of contention as Azerbaijan’s sympathy for Pakistan’s toxic politics in Kashmir. Though India and Pakistan were among the first states to recognise Azerbaijan’s independence, Baku has preferred to develop a strong political relationship with Islamabad. It needs to be mentioned that Armenia has been hugely dependent on Russia since the breakup of the Soviet Union. It has maintained extremely close security ties with Russia since joining the Collective Security Treaty Organization (CSTO). But Russia’s strategic interests seem increasingly more aligned with Azerbaijan’s than Armenia’s. Now, Armenia does not view Russia as a security guarantor, and is making overtures toward other major powers, particularly India and Iran. However, any prospect of normalisation of relations between Armenia and Azerbaijan would be welcomed by India.  

Iran’s tense relationship with Azerbaijan is also a diplomatic roadblock. Azerbaijan would, however, like to ensure that its growing ties with Pakistan do not come at the expense of the country’s relations with India. Last year, Azerbaijan exported more than 24 million tons of crude oil to many overseas markets in Europe, Africa, and Asia, and earned about $18 billion in income. Italy was the top buyer, followed by Israel, India, Croatia, Spain, Portugal, and the UK. As Azerbaijan looks at diversifying its hydrocarbon trade, India can play an important role.

India has to weigh the geopolitical concerns associated with its expanding regional engagement in light of the region’s problems with terrorism and ethnic conflicts. The Caspian region’s security concerns stem from its closeness to some of the conflict-driven hotspots. As the Afghan Taliban government has been steadily consolidating its grip on power, its rivalry with ISIS has been heating up. The UNSC has frequently expressed concerns not only about the worsening condition of women and minority rights in Afghanistan, but also about terrorism safe havens under the Taliban rule. Without stabilizing Afghanistan, the Caspian region’s energy potential is difficult to exploit. 

Some Caspian countries are landlocked, while others have poorly developed infrastructure and connections. All this can make it difficult for Indian investment potential. Moreover, commercial operations and investments in the Caspian countries can be hampered by diverse regulatory frameworks, legal systems, and bureaucratic structures. India will need to find ways to negotiate such complications.

Conclusion

The Caspian region has been witnessing Russia’s strategic shift towards Asia due to Western sanctions, Iran’s inclusion in the SCO coupled with the growing interest of external players to develop new connectivity links with the countries of South Caucasus and Central Asia. As new connectivity routes are being implemented, India must augment its engagement with the Caspian region and undertake more measures for connectivity initiatives with Caspian littoral states. India requires meticulous diplomacy, strategic planning, and coordination with regional countries in order to realise the Caspian region’s potential in the areas of energy security, connectivity, trade, and geopolitical influence.