How has India benefitted from the SCO?

Now that it has been 2 years since India has become a full member of the Shanghai Cooperation Organization (SCO), it is time to analyze whether this grouping has benefited India and if not, then what must India do to realize its full potential. Is it also going to die a death like SAARC or is it full of energy like BIMSTEC?


Right from the time India became a member of the SCO in 2017 along with Pakistan, there was a suspicion that India had become a member only because Russia wanted to balance China’s growing dominance and that was also negated by China, which brought in Pakistan.

What has been good is that bilateral issues between India and Pakistan haven’t been allowed to thwart productive discussions on other issues.

China seems to have got what it wanted by drumming up support for its Belt and Road Initiative (BRI), and bolstering its case in the ongoing trade war with the USA as can be understood from statements for ‘joint cooperation against increased protectionism’, finding their way into the Bishkek Declaration.

What about India?

India is the only country that is opposed to the BRI, meaning India’s sovereignty concerns are not cutting ice with any of the members.

Critics say that even though there are references to jointly combating cross-border terrorism under a regional anti-terrorism architecture and a condemnation of state sponsorship of terrorists, it seems only farcical because of the presence of Pakistan, a state that India has repeatedly called as a terror sponsor. They go on to the extent of saying that it looks like an international version of the by now infamous, ‘Kadi Ninda’ notwithstanding the diplomatic victory that India achieved in the listing of Masood Azhar as a global terrorist.

But does that mean that India should quit the SCO, saying that the continued presence of Pakistan shows the SCO’s lack of respect for Indian concerns and strong action against terror? No, because India still stands to gain a lot by remaining a member of the SCO. After all, we cannot allow every regional grouping with Pakistan in it to go the SAARC way. It would also give the wrong signal to Central Asian countries.

Taking the INSTC route to prosperity

Therefore, India has to ignore Pakistan and a rising China to focus on realizing the full potential of its increased engagement with Central Asia and by extension, Eurasia. Apart from petroleum and natural gas, Central Asia has abundant mineral resources of antimony, aluminium, gold, silver, coal and uranium. What is necessary is the accelerated adoption of the use of the International North-South Transport Corridor(INSTC)for optimum utilization of the Chabahar port, i.e. think of it as more than a gateway to Afghanistan.A Central Asian country like Uzbekistan should be encouraged to sign up to the 2016 Trilateral Transit Agreement on Chabahar to take this forward. For landlocked Uzbekistan, Chabahar is the nearest port towards the south. All that is needed is road or railway connectivity from Zahedan in Iran to Mazar-i- Sharif in Afghanistan and onwards into Uzbekistan. Other possibilities like connecting to Turkmenistan also exist like extending the road from Zahedan towards Mashad in Iran.

Though trial runs through the INSTC have been done, the trade levels are nowhere like the way that China has with Europe through its numerous trains, in spite of having huge potential. In fact, trade with Central Asia declined in 2018-19 as compared to 2017-18 according to figures from the Indian Ministry of Commerce. The total trade with the region is just around $1.5 billion. Also, most of the trade is with one country, i.e. Kazakhstan.

Taking the INSTC route to prosperityTaking the INSTC route to prosperity

To boost trade there have to be more Preferential trade agreements with each of these countries and a Free Trade Agreement with the Eurasian Economic Union(EEU) or even the Commonwealth of Independent States (CIS). Some positive steps taken in this regard are the recent setting up of the Kazakh Invest Office in New Delhi and the preparation of a 5-year roadmap for bilateral trade during PM Narendra Modi’s visit to Kyrgyzstan.

Related Article: Ambassador launched regional representative office of ‘Kazakh Invest’ to boost Indian investments in Kazakhstan

Related Article: India looks East and gets cosy with Kyrgyzstan for a five-year roadmap to increase bilateral trade

Indian goods will not have to move only in a straight line from Mumbai to St Petersburg through the INSTC. As a member of the Ashgabat Agreement, Indian goods will also be able to use the Eurasian rail and road networks like westwards to Istanbul in Turkey and eastwards to Almaty in the far eastern end of Kazakhstan. India’s participation brings in yet another positive dimension—once projects like the Bangladesh-Bhutan-Nepal-India(BBIN) corridor, India- Myanmar- Thailand Trilateral Highway are completed, even South East Asia would get connected to Central Asia.

An illustration produced by the GIS Lab of the Institute of Defence Studies and Analyses (IDSA), Delhi, shows the numerous routes of transportation that are possible.An illustration produced

Formation of an SCO Energy Club and Standing up for Iran

India’s goal of diversifying its oil and gas imports can be achieved through agreements with SCO countries. Why should India only have to import oil and gas from US allies (chiefly, Saudi Arabia, UAE-even though they are not inimical to India either) and not from countries which are not pro-US but not anti-India like Iran and Venezuela? India hasn’t even got any incentive for stopping imports from Iran. The Arab nations still continue to charge India and also China, higher prices, i.e. the ‘Asian Premium’ on imports. The US hasn’t even tried to use its good offices to India’s favour.

India can get access to Central Asian gas through an alternate route as the TAPI pipeline doesn’t seem to progress. An effort has to be made to get Kazakh, Turkmen and Azerbaijani gas through Iran to India (undersea pipeline) till the time sanctions are lifted on Iran. The time has come for India to do the hard talk with the USA. It is not enough for India to condemn unilateral sanctions in the Bishkek declaration. If India can be insistent in trying to save the S-400 deal, then India has to do the same and stress about the importance of its dependence on Iran for cheaper oil and gas. What is the use of the USA calling India as a strategic partner if it cannot understand Indian energy security concerns?

Related Article: US focused on advancing ‘incredible ties’ with New Delhi

Together the SCO and EU can stand up to USA’s unilateral sanctions against Iran citing the International Atomic Energy Agency’s(IAEA’s) statements that Iran was following the nuclear deal in letter and spirit. Together the SCO and EU are more than half of the world’s population. Collectively standing up to USA’s unilateral sanctions itself, will give the SCO, importance and voice like no other. Full membership for Iran in the SCO can also be considered.

What is good for India is that now the US cannot back up Pakistan against India (like in the days of the Cold War) as it has been exposed as a state sponsor of terrorism and it also needs Indian cooperation against a resurgent China, especially in the Indian Ocean Region. If the US goes back to its strategy of propping up Pakistan against an independent-minded India which is acting in its national interest, then its own remarks against Pakistan, especially in the context of Masood Azhar and Osama Bin Laden would come back to haunt it.

India can factor in some of the US concerns without shooting itself in the foot

To avoid being seen as getting too close to China and Russia, India can reduce the number of loans that it is taking from Chinese led banks like the Asian Infrastructure Investment Bank (AIIB).The private sector should also be dissuaded from taking loans from organizations like the China Development Bank (CDB) even though they may be granted on concessional terms because of the past record of their behaving in alignment with China’s strategic interest and tendency to use these loan dependent projects as tradeoffs to settle disputes in their favour. A well-known case is that of an Indonesian power company—PLN whose projects were suspended till an unrelated airline dispute was settled in China’s favour.

In 2017-18, 28% of all AIIB loans were granted to Indian projects, which is quite high for a bank with more than 80 member countries.

Though India has not yet spoken up in support of the US in the Huawei case, there is still time before the 5G trials begin. India can still bar Huawei on national security reasons given that many countries have already done it. This would show that India is responding to US concerns, which is required in some measure for India to expect the US to give it some concessions or exceptions. Or maybe, India can reduce tariffs on the Harley Davidson bikes, which are close to Trump’s heart.

These are the cards that India has to play against USA’s increasing dictatorial attitude whether it is Iran, GSP or the S-400 deal. Experts, the world over, are puzzled with Trump’s decisions that are essentially hurting USA’s partners. The US has to understand that viewing everything through the lens of tariffs and trade deficit is not going to help.

Two upcoming events, i.e. the visit of Secretary of State, Mike Pompeo to India and the planned Modi-Trump meeting on the sidelines of the G-20 Summit in Osaka later this month would be crucial for India to make its priorities clear.

Way Forward- Focus on Tangible Returns

Till tangible returns are not obtained, i.e. increased trade with Central Asia and diversification of energy imports, the SCO would be just another regional forum in which India is participating. The onus is on India to position itself in a way that it can make maximum gains from it. India can earn a lot as a transshipment hub between Central Asia and South East Asia. From the ancient Silk Route, we now have to move on to a Mega Modern-Day Silk Route.

The achievement of India’s domestic goals like Digital India and infrastructure development projects, i.e. Multi-Modal Logistics Parks, Bharatmala and Sagarmala would be crucial for this. Cheaper energy imports and access to more mineral resources would provide the much-needed fillip to Make in India and the target of a $5 trillion economy by 2024.

Bollywood has already done some of the work through its soft diplomacy and now it’s up to the diplomats and businessmen to do the rest. Tourism and people to people connection will definitely chip in.

India must push for the SCO to be included as a grouping in the Afghan peace process as the US- Taliban peace process isn’t heading anywhere. Already, the SCO’s spirit is clear. It wants a solution to the Afghanistan issue through an Afghan led dialogue and an Afghan led dialogue means the involvement of not just the Taliban but also the Afghan government. The advantage of bringing the SCO into the peace process is that it involves more stakeholders- India, Pakistan, China, Russia and also some of Afghanistan’s other neighbours like Tajikistan and Uzbekistan which would be the first responders to any crisis that could occur as a fallout of the US military pullout.

A new and aspirational India is not going to accept an India basking in the glory of idealism, it wants tangible returns. It is tired of India being called an ‘emerging power’; it wants India to be ‘one of the powers’ at the global high table.

Author Bio

Rajesh Saravanan is a student at Hindu College, University of Delhi. He has a keen interest in foreign policy and aspires to be a diplomat.  He is doing his internship with The Policy Times and occasionally blogs at Indian Zest.

Article Name
How has India benefitted from the SCO?
Now that it has been 2 years since India has become a full member of the Shanghai Cooperation Organization (SCO), it is time to analyze whether this grouping has benefited India and if not, then what must India do to realize its full potential. Is it also going to die a death like SAARC or is it full of energy like BIMSTEC?
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The Policy Times