Mongolia: trade relations with India intensify

Mongolia intensifies trade relations with India boost and increase their trade flows. During a meeting held in Ulan Bator, the two heads of state, Pratibha Patil and Tsakhia Elbegdorj, were able to take stock of the situation: among the objectives of the meeting was the strengthening and consolidation of political-economic relations between the two states through the definition of a number of agreements capable of giving greater stimulus to the Mongolian economy. Strong cultural ties already exist between the two countries, and the economic growth experienced by Mongolia in recent years, together with the improved democratic conditions that have taken place especially following the dissolution of the Soviet Union and a consequent openness towards the free market, have undoubtedly contributed to accelerating a process of rapprochement on the part of New Delhi, which sees in Ulan Bator an economic and political partner on which it can rely.

The meeting led to the signing of some important agreements, both from a strategic and diplomatic point of view and from a strictly commercial point of view. The two presidents signed a bilateral agreement on cooperation related to defense policy and the redefinition of their strategic interests, but they did not stop there. Agreements were also signed between the respective Planning Commission (these are government institutions that are responsible for providing development plans and projects, aimed at improving the economic and social conditions of the countries in question).In this regard, India, which can count a certain level of experience accumulated in recent years, will support Mongolia in the economic planning and design processes, through better optimization of resources and the creation of a design apparatus. In fact, Mongolia has established a National Development and Innovation Committee in which India will play an important role.

The ambitious partnership plan also includes agreements on energy, and mining, as well as the creation of a center dealing with education, Information Technology and outsourcing, which will involve an investment by New Delhi of US$20 million. In order to intensify contacts between the two nations and further improve trade relations, cooperation pacts have also been signed for the enhancement of media through the signing of agreements and exchange programs that will allow easier travel between the two populations and more information between the two states, through media channels.

India has long since established several training centers in Mongolia, offering its cooperation in education and training to better qualify the skills of young people and the local workforce. Not surprisingly, a number of Indian companies have long since set their eyes on the potential offered by Mongolia, establishing themselves in this vast and sparsely populated territory. The exploitation of minerals, represents one of the country's main businesses, and in the future the number of Indian companies operating in different sectors, from agriculture, food, technology products, education, infrastructure, and tourism will be increasing.

Covering an area of 1,565,000 square kilometers, Mongolia has a population of about 2.7 million. GDP grew by 6.1% in 2010, and the local market is looking very attractive.Since the 1990s, reforms have been implemented to open up the economy, encouraging and incentivizing foreign investment. The country has recorded significant growth rates thanks not only to the abundance of natural resources, which are the main wealth, but also to the presence of a stable political system. There is certainly a need for time to consolidate development and give greater impetus to growth dynamics, but it is nevertheless a nation that has successfully navigated the transition from a planned economy to a free market economy.

However, Mongolia is overwhelmingly dependent on its neighbors, namely Russia and China. The latter, especially, is the main trading partner: trade with Beijing accounts for 50% of total foreign trade (in terms of exports and foreign trade), and China receives 75% of Mongolian exports. For this very reason, India considers it appropriate to intensify its relations with Ulan Bator: the trade partnership between the two countries has always been good and and bilateral trade reached US$16.9 million in 2010, thanks especially to Indian exports of pharmaceuticals, veterinary medicines, automobiles and auto parts.

According to leading international analysts, Mongolia is a rising economy capable of offering trade and investment opportunities in the medium to long term. Moreover, its privileged relationship with New Delhi constitutes an excellent opportunity for interested Italian companies, since India itself could in fact represent the useful channel and bridge to access this market.

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