India at the SCO: The Economics of a Eurasian Opening

The Shanghai Cooperation Organisation turned twenty-five this year. Created in 2001 as a six-member Eurasian security grouping, it has expanded into a ten-member forum bringing India together with China, Russia, Pakistan, Iran, Belarus and the four Central Asian republics. Its members account for more than 40 per cent of the world’s population and roughly a third of global output. India became a full member in 2017 for specific reasons: a standing seat alongside Russia and China, access to a regional counter-terrorism structure and, above all, a route into Central Asia, a region New Delhi has sought to reach commercially since the Soviet Union dissolved but has never accessed at scale.

A Productive Beginning in Tashkent

Prime Minister Narendra Modi’s itinerary reflected those priorities: bilateral business in Tashkent, followed by multilateral diplomacy in Bishkek. India and Uzbekistan elevated their relationship to a Comprehensive Strategic Partnership and announced sixteen outcomes, including understandings on mining, critical minerals, uranium supplies and trade barriers. They created an economic and financial dialogue, agreed to examine a preferential trade agreement, enabled Indian UPI applications to use Uzbekistan’s national QR network, and set a bilateral trade target of $5 billion by 2030.

This was substantial diplomacy. Uzbekistan is Central Asia’s most populous country, a major uranium supplier and a growing market for pharmaceuticals, engineering goods and digital services. A longer-term uranium arrangement would strengthen our energy security, while mineral cooperation could diversify supply chains as critical resources become instruments of state power. The choice of sectors was sensible: it matched Uzbek assets with Indian capabilities instead of relying on goodwill alone. Defence co-production, pharmaceutical manufacturing and digital infrastructure also moved the relationship beyond civilisational rhetoric.

Yet the $5 billion target exposes the distance between diplomatic ambition and economic capacity. Bilateral trade is presently around $1.3 billion. Reaching $5 billion in four years would require growth of almost 40 per cent annually. That is not impossible from a low base, but it will not be achieved through another business forum or a preferential tariff alone. The joint statement itself identifies the real obstacles: market access, banking, payments and, most importantly, connectivity.

What Bishkek Delivered

That problem followed Prime minister Modi to Bishkek. The 26th SCO summit approved 28 documents, including the Bishkek Declaration, Charter amendments and regulations for new security and anti-drug centres. It advanced a transport roadmap for 2026–30, while the proposed Development Bank remained unsettled. These remain meaningful outcomes. We retained a permanent forum for discussing terrorism, Afghanistan, energy and connectivity with every major Eurasian power. India also combined participation with a firm sovereignty-based position on connectivity, an appropriate use of membership rather than obstruction for its own sake.

But access is not the same as influence, and declarations do not move cargo. After twenty-five years, the SCO still has no free-trade area, common tariff or effective dispute-settlement mechanism. Much of the trade described as “intra-SCO” is simply Chinese trade with Russia, India and Central Asia that would occur without the organisation. The SCO can convene governments and reduce political friction but it has not yet become an institution capable of materially changing the cost of commerce.

The China Gap

The comparison with China is sobering without needing to become fatalistic. India’s annual trade with the five Central Asian republics remains below $2 billion. China’s reached $106.3 billion in 2025, rising 12 per cent in a single year and crossing $100 billion for the first time. Geography gives China an advantage India cannot reproduce, but Beijing has also converted geography into infrastructure, finance, warehousing and payment networks. The China–Kyrgyzstan–Uzbekistan railway, now under construction, will deepen that advantage by reshaping regional freight routes.

The gap is better treated as a discipline on Indian policy than as a counsel of defeat. We cannot outspend China or reproduce its contiguous borders, but India has advantages in pharmaceuticals, healthcare, education, information technology and low-cost digital systems. The UPI arrangement shows how we can reduce commercial friction using proven capabilities. A more credible strategy would turn these niches into durable supply chains rather than advertise a contest on China’s terms.

India’s refusal to endorse the Belt and Road Initiative remains justified because the China–Pakistan Economic Corridor passes through territory claimed by India. Sovereignty cannot and will not be traded for a summit declaration. But an objection is not a connectivity policy. India’s route to Central Asia depends heavily on Iran’s Chabahar port and the International North–South Transport Corridor, both vulnerable to sanctions, conflict and incomplete links, while Pakistan denies direct overland access. Without more reliable routes, repeated trade targets will remain hostage to events outside India’s control.

Turning Targets into Trade

A strong possible move would be to sequence our ambition differently and more strategically. Uranium, mineral concentrates, pharmaceuticals, speciality chemicals, software and high-value engineering or defence components can bear higher transport costs better than bulk goods. These are also areas in which the Tashkent agreements created genuine openings. Sector-specific targets, anchor firms, regulatory deadlines and measurements of shipping time and cost could turn the $5 billion headline into a commercial scorecard for the 2027 India–Central Asia Summit, which we will host.

The Development Bank Question

The proposed SCO Development Bank presents a similar choice. India is right to be cautious about a lender capitalised largely by China, proposed lending in yuan and funnelling contracts towards Chinese companies. That would convert commercial dominance into financial rule-setting. But standing outside would leave us without a voice in its design. With the rules still unsettled, a next step could be to state our terms for participation: transparent procurement, meaningful shareholding, safeguards against tied lending and a local-currency window permitting rupee finance for projects involving Indian suppliers. Conditional engagement would be more useful than automatic endorsement or silent abstention.

The Political Value of the SCO

The political results deserve the same balanced reading. PM Modi was right to demand action against terror financing, recruitment and safe havens; consensus on rejecting double standards is not trivial in a body containing Pakistan and China. The new security and anti-drug centres may prove more durable than summit language if India secures staffing, data-sharing procedures and links with existing international mechanisms. Yet the declaration’s unnamed condemnation of strikes on Iran, and silence on Ukraine, show the limits of consensus. Pakistan’s assumption of the chair for 2026–27 will make follow-through on India’s counter-terrorism priorities harder but not less necessary.

The summit also does not amount to India choosing an eastern camp. PM Modi’s meetings with Vladimir Putin, Masoud Pezeshkian and Xi Jinping preserved room for manoeuvre. Russia remains important for energy and defence; China is simultaneously a major trading partner, a source of industrial dependence and a strategic competitor. The SCO is valuable precisely because we cannot afford to speak only to countries with which we agree.

Beyond Summitry

The Bishkek summit therefore produced neither a breakthrough nor a failure. Tashkent delivered credible openings, and the SCO preserved political access while making modest institutional progress. What it did not solve was the central weakness of our Eurasian policy: commerce remains far behind diplomacy. China’s lead in Central Asia was built not by communiqués but by railways, credit and supply chains. We need not imitate that model, but its central lesson remains relevant. The visit will ultimately be measured by whether minerals, medicines, machinery and money move more cheaply and reliably between India and Central Asia.