Mongolia: trade relations with India intensify

Mongolia is intensifying trade relations with India, with increasing commercial flows. During a meeting held in Ulaanbaatar, 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 and economic relations between the two states through the definition of certain agreements that would provide greater impetus to the Mongolian economy. Strong cultural ties already exist between the two countries, and the economic growth experienced by Mongolia in recent years, combined with the improvement of democratic conditions, particularly following the dissolution of the Soviet Union and the consequent opening towards the free market, have undoubtedly contributed to accelerating a process of rapprochement by New Delhi, which sees Ulaanbaatar as a reliable economic and political partner.

The meeting led to the signing of several important agreements, both from a strategic and diplomatic perspective and from a strictly commercial one. The two Presidents signed a bilateral cooperation agreement concerning defense policy and the redefinition of their strategic interests, but they did not limit themselves to that. Agreements were also signed between the respective Planning Commission (these are governmental institutions that deal with 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 on a certain level of experience accumulated over the years, will support Mongolia in economic planning and design processes, through better resource optimization and the creation of a design apparatus. Mongolia has indeed established a National Committee for Development and Innovation, in which India will play an important role.

The ambitious partnership plan also includes agreements in energy and mining, as well as the creation of a center focused on education, information technology, and outsourcing, which will involve an investment of USD 20 million from New Delhi. To intensify contacts between the two nations and further improve commercial relations, cooperation pacts have also been signed to enhance communication channels, thanks to the establishment of agreements and exchange programs that will allow for easier movement between the two populations and greater information sharing between the two states through media channels.

India has long established several training centers in Mongolia, offering its cooperation in the field of education and training to further qualify the skills of local youth and labor. It is no coincidence that some Indian companies have long had their sights set on the potential offered by Mongolia, settling in this vast and sparsely populated territory. Mineral exploitation represents one of the country's main businesses, and in the future, the number of Indian companies operating in various sectors, from agriculture, food, technological products, and training, to infrastructure and tourism, will continue to grow.

Mongolia, which covers an area of 1,565,000 square kilometers, has a population of approximately 2.7 million. GDP grew by 6.11% in 2010, and the local market presents a very attractive outlook: since the 1990s, in fact, the necessary 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 its abundant natural resources—which represent its primary wealth—but also to the presence of a stable political system. While time is certainly needed to consolidate development and further boost growth dynamics, this is nonetheless a nation that has successfully navigated the transition from a planned economy to a free-market economy.

However, Mongolia relies heavily on its neighbors, namely Russia and China. China, in particular, is its main trading partner: trade with Beijing accounts for 50% of total foreign trade (in terms of exports and imports), and China receives 75% of Mongolian exports. For this very reason, India believes it is appropriate to strengthen its ties with Ulaanbaatar: the trade partnership between the two countries has always been strong, and bilateral trade reached $16.9 million in 2010, thanks in particular to Indian exports of pharmaceuticals, veterinary medicines, automobiles, and auto parts.

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

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