India - Kazakhstan Economic and Commercial Relations

Kazakhstan, the second largest of the former Soviet Republics, occupies an area of 2724900 square kilometers with a population of 15 million. It is the most secure and politically stable country in Central Asia. Since its independence in 1991, Kazakhstan's economy has been continuously experiencing an expansive growth. GDP of Kazakhstan in 2003 totalled US $ 27.48 billion with 9.2% GDP growth.

The country possesses vast fuel reserves (major petroleum and natural gas deposits) as well as large amounts of other minerals and metals (coal, iron-ore, manganese, chrome ore, nickel, cobalt, copper, molybdenum, lead, zinc, bauxite, gold and uranium). The proven reserves of Kazakhstan stand at 4 billion tonnes of oil & gas condensate and 3 trillion cubic meters of gas. In 2003 production came to about 51.3 million tons of oil and 14.04 billion cubic meters of gas. The investment in exploring and extracting hydrocarbons in the country would total US$ 4.4 billion in 2003-05, US$ 8.6 billion in 2006-10 and US$ 13.5 billion in 2011-15. Kazakhstan is a relatively large agricultural country, producing and exporting mainly livestock and grain. The industrial sector is based on extraction and processing of natural resources and also on construction of equipment, tractors and agricultural machinery.

The main areas of investment have been projected as machine building for oil & gas industry, agricultural machinery, petro-chemical industry, construction material, food processing, IT and bio-tech parks.

Indo-Kazakh relations are friendly and based on certain common values such as secularism, democracy and rejection of fundamentalism. Indo-Kazakh relations are traditionally warm and cordial. Economic relations, however, do not match the existing vast potential in this field. Our trade stands around US $ 78.91 million as in 2003. The necessary environment exists for bringing out relations to fruitition by increasing our economic and commercial cooperation manifold.

The major Indian presence is in Pharmaceutical and Tea markets. Almost all the major Pharmaceutical companies have their operations in Kazakhstan and are gaining/increasing their market share every year. Ispat Karmat is major NRI investment in Kazakhstan worth over US $ 800 million. It operates an integrated steel plant with six million tonne steel capacity per annum. It contributes approximately 8% to the Kazakh GDP. Kazakhstan sees Ispat Karmet plant as a model investment venture. In January 2004, Punj Lloyd Kazakhstan Ltd. signed a contract with PFD/TCO International LLC for the construction of large and small bore pipelines. The contract amount is approx. US $ 35 million and the project involves laying of pipelines that will integrate the existing Tengiz and Korolev fields and a new project of a processing plant at Tengiz.

Major commodities of export from India are Tea, Pharmaceuticals, Medical equipment, Machinery, Tobacco, Consumer items etc. Major items of import by India are Silver and Silver-Gold, Asbestos, Steel, Aluminum, wool, raw hides etc.

Indo-Kazakh Trade Figures (in Million USD) Source: - Statistical Agency of the Kazakhstan

Investment Opportunities

" Oil & Gas :: Kazakhstan has good potential for investment in the oil, setting up of refineries, pipeline construction and gas sectors, as also in certain spinoff areas like industrial housing, laying of roads and training. India is one of the largest consumers of oil and gas in the world and with our fast economic growth our need of oil & gas would increase substantially. We also have expertise in oil exploration and refining and we can play a positive and constructive role in the development of oil & gas sector of the Kazakhstan.

" Information Technology:-: Kazakhstan is keenly interested in establishment of a Software Technoloy Park and India as an IT Super Power with its expertise in frontier technology fields such as Information Technology, Bio-technology, Satellite imaging etc. can play a major role in the development of IT Sector of Kazakhstan.

" Construction: In Kazakhstan, the move of the administrative capital from Almaty to Astana has also meant business opportunities for the construction companies. Many opportunities exist in the continuing expansion of the new capital city, Astana and in strengthening and diversifying the country's infrastructure. There is a growing demand for all types of construction services, including construction, maintenance and renovation of industries and public utilities and residential buildings, design and assembly services. A CII led Construction delegation representing major Indian Construction Companies such as Larsen & Toubro, Punj Lloyd etc. visited Kazakhstan from August 31 - September 4, 2003. The overall assessment of the members was that there is plenty of scope for construction business in Kazakhstan.

" Commercial farming : Kazakhstan is a relatively large agricultural country, producing and exporting mainly livestock and grain. Commercial farming coupled with food processing industry could be another prospective area.

Strategy recommended for Kazakhstan

" Regular visits by trade delegations, representatives of various Export Promotion Councils and Chambers as also their participation in various trade fairs in Kazakhstan would result enhancing bilateral trade.

" An exclusive "Made in India Fair" showcasing strengths of Indian Industry may be considered.

" Organization of "Enterprise India", exhibition of Small & Medium Scale Enterprises and Services to be made a regular feature.

" The medical industry in Kazakhstan has developed at a fast pace over the last five years. However, Kazakhstan is still heavily dependent on imports of medicines. India being one of the main supplier of pharma products to Kazakhstan, it is proposed that a special Exhibition dedicated to Indian Pharmaceuticals Industry be organized in Kazakhstan.

Constraints in the Commercial Work

" Lack of viable trade route is the biggest bottleneck

" Lack of interest of Indian businessmen & general unawareness

" Absence of Blue-chip Indian Companies

Source : Indian High Commission, Kazakhstan