Exim Bank Of India Sees Central Asia As Key Growth Market To Soften US Tariff Hit

(MENAFN- Live Mint) New Delhi: India's trade with Central Asia has quadrupled over the past decade but vast untapped potential remains, Harsha Bangari, managing director of the Export-Import Bank of India (India Exim Bank), said on Wednesday, underscoring the need for stronger financial links to unlock this growth.

Speaking at a webinar titled 'Bridging borders: role of trade finance in enhancing India-Central Asia trade' on Wednesday, Bangari said Central Asia, with its strategic location and abundant natural resources, offered immense potential for Indian businesses.“At the same time, India's growing capabilities in manufacturing and technology make it a natural partner for the region,” she said. Central Asia comprises Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan.

Diversification drive

To be sure, Indian exporters are scrambling to diversify into new markets after the US imposed a 50% tariff on Indian goods. The move has eroded competitiveness in several sectors, making it harder for exporters to sustain business in the US, one of India's largest trading partners.

Exporters are now stepping up efforts to tap opportunities in new markets such as Central Asia, Africa and Latin America to offset the potential loss of market share in the US.

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Bilateral trade between India and Central Asia rose from under $500 million in 2014 to more than $2 billion in 2024, according to the International Trade Center.“Another $2 billion in untapped trade potential remains, contingent on easing the financing constraints that hinder small and medium-sized exporters in particular,” Bangari said.

Mind the gap

According to Asian Development Bank (ADB), the covid-19 pandemic, geopolitical strain, and tighter financial conditions have widened the global trade finance gap to $2.5 trillion, leaving many businesses without access to credit and risk-mitigation tools. Nearly 80% of all global trade relies on such financing instruments, she added.

Exim Bank is seeking to bridge that gap through its Trade Assistance Program, which links Indian commercial lenders with more than 100 banks overseas. Since its launch in 2022, the program has facilitated more than 1,200 export transactions worth over $3 billion across 52 countries, including Uzbekistan and Kazakhstan.

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“The bank is also extending credit and guarantees to Indian firms executing infrastructure, energy, and technology projects in the region. It has financed power transmission projects in Kazakhstan and recently backed the supply of near-zero liquid discharge technology for a thermal plant in Uzbekistan,” Bangari said.

“Recognising that trade is increasingly tied to global investment flows, Exim Bank is supporting Indian companies expanding abroad through equity finance, loans, and advisory services. Investments backed by the bank include ventures in pharmaceuticals, healthcare, hospitality, and construction across Central Asia,” she added.

Opportunity knocks

Bangari also unveiled findings from a joint study with the Eurasian Development Bank, titled 'Exploring trade and investment relations between India and Central Asia: Unlocking economic benefits', which identifies opportunities to deepen cooperation in sectors ranging from natural resources to renewable energy.

Key policy recommendations in study include enhancing trade based on identified potential, cooperation in digital public infrastructure (DPI), facilitating market entry through joint ventures and technological collaboration, enhancing access to trade finance, improving transport and logistics, and facilitating trade and border crossings in the Central Asian republics.

“There are numerous areas where our expertise and resources can converge,” Bangari said.“The challenge now is to create the financial architecture that allows this partnership to realise its full potential."

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