The development of transport interconnectivity is the foundation for revitalizing connectivity between Central and South Asia

I. The role of the Termez Dialogue in shaping a new architecture of economic cooperation between Central and South Asian countries

In the context of accelerating geopolitical shifts, the fragmentation of global trade, and declining trust in multilateral institutions, the need to strengthen regional connectivity is more urgent than ever. Central and South Asia - regions historically linked by trade and cultural ties - are once again making efforts to deepen cooperation as a response to the growing instability of the global system.

Against this backdrop, the importance of regional platforms aimed at restoring dialogue, rebuilding trust, and ensuring sustainable development is increasing. One such key initiative, intended to play a strategic role in bringing the regions closer together, is the Termez Dialogue on Regional Connectivity between Central and South Asia, which will take place from May 19 to 21, 2025, in the city of Termez, Surkhandarya region. This high-level platform brings together politicians, business representatives, financial institutions, and think tanks from both regions to develop a joint approach to strengthening economic and transport linkages.

Economic and transport connectivity between the two regions is no longer a matter of strategic choice - it is a vital necessity. The establishment of resilient trade corridors, efficient transit routes, and harmonized regulatory mechanisms can enhance resilience to external shocks, stimulate inclusive growth, and strengthen regional stability. At the same time, the digitalization of trade, logistics, finance, and customs administration opens new opportunities for accelerating cross-border flows of goods, services, investment, and innovation.

A special place in this process is occupied by Afghanistan, which possesses a key geographical location at the intersection of the interests of Central and South Asia. Ensuring stability and integrating Afghanistan into regional infrastructure and trade networks can give an impetus not only to its own economy but also create new opportunities for neighboring countries.

II. Trade between Central and South Asia: current status, structural features and export potential

Central and South Asia represent a dynamically growing market. Central Asia is transforming into a center of economic and investment activity. In particular, EBRD experts are already forecasting an increase in regional GDP this year to 6%, which is significantly higher than the average figures in other regions. Currently, Central Asia is experiencing strong intra-regional dynamics - over the past few years, mutual trade has increased 4.5 times, the volume of mutual investments has doubled, and the number of joint ventures has increased fivefold. Moreover, the countries of Central Asia are integrated into regional structures such as the SCO, EAEU, and OTS, and they pursue a multi-vector foreign policy.

South Asia, in turn, is also a major market with a population of over 2 billion people and a GDP of $4.9 trillion. In both regions, the majority of the population is made up of young people, with an average age of 27. This represents a demographic dividend that can be harnessed for the prosperity of the states. At the same time, demographic growth presents a challenge for the regions.

In particular, the population needs food, socialization, education, jobs, housing and social benefits, and access to public and political participation. Under these conditions, the development of industrial cooperation and human capital becomes increasingly relevant.

Over the past eight years, trade relations between the countries of Central and South Asia have shown a steady growth trend. Despite this, the overall volume of trade remains relatively low compared to the potential capacities of the regions. This indicates an underutilization of existing competitive advantages and the need for systemic efforts to expand economic ties. Uzbekistan and Kazakhstan play the leading role in the development of mutual trade, accounting for the overwhelming majority of both exports and imports. The other Central Asian countries currently have a limited presence in South Asian markets.

The average annual total import of Central Asian countries from South Asia during the period 2017–2024 is characterized by a high concentration in a number of key product categories. The leading position is held by pharmaceutical products (HS Code 30), with an import volume reaching 485 million USD per year. This points to the region’s strategic dependence on the supply of medicines and pharmaceuticals, primarily from India, and underscores the strategic importance of establishing joint production in the pharmaceutical sector.

1-table. Total average annual imports of Central Asian countries from South Asia (India, Pakistan, Bangladesh) during 2017–2024

Source: https://www.trademap.org/

The average annual total import of India and Pakistan from Uzbekistan and Kazakhstan during the period 2017–2024 demonstrates a pronounced product concentration, with mineral fuels, oil, and products of their distillation (HS Code 27) occupying a dominant position in the trade structure. The supply volume of this category amounts to 1.047 billion USD per year, which confirms the strategic importance of Central Asia’s energy resources in meeting the energy needs of South Asia. However, the focus on raw material exports limits the sustainability of the export model and makes it vulnerable to external price fluctuations.

2-table. Total average annual imports of India and Pakistan from Uzbekistan and Kazakhstan (2017-2024)

Source: https://www.trademap.org/

Exports from Central Asian countries to India grew significantly between 2017 and 2020, reaching a peak of USD 2,013.4 million in 2020. However, starting in 2021, there has been a gradual decline in export deliveries, which fell to USD 602.6 million by 2024. Imports from India also showed growth, especially after 2020, rising from USD 928.7 million in 2020 to USD 1,850.1 million in 2024. This trade imbalance with India indicates the unstable nature of export channels and the growing dependence of the domestic market on imports of finished goods. From 2017 to 2022, Central Asian countries maintained a positive trade balance with India. However, starting in 2023, the trade balance turned negative and reached a deficit of USD -1,247.4 million in 2024, reflecting increased imports amid a sharp decline in exports.

3-table. Trade of Central Asian countries with South Asian countries

Source: https://www.trademap.org/

Trade between the countries of South and Central Asia shows significant uneven development both in terms of countries and the range of goods. India is the largest exporter to the Central Asian region, with the highest number of product categories worth over USD 1 million being imported by Kazakhstan (34 positions) and Uzbekistan (33 positions).

Pakistan and Bangladesh have a much more limited trade presence in the region, especially in Turkmenistan, where no product categories worth over USD 1 million are imported from Pakistan, and only four from Bangladesh to Uzbekistan and five to Kazakhstan. Thus, the structure of imports remains poorly diversified, which calls for a reassessment of foreign economic policy directions.

4-table. The diversification of South Asian exports to Central Asia

Source: https://www.trademap.org/

At the same time, the export positions of Central Asian countries to South Asia are much more modest. The leaders are Uzbekistan and Kazakhstan, each exporting 8 product categories to India, as well as 5 and 3 product categories respectively to Pakistan. The remaining countries of the region—Kyrgyzstan, Tajikistan, and Turkmenistan—have a limited number of export positions to South Asia, which indicates insufficient diversification of their trade relations with the region. Tajikistan stands out in particular, as it has virtually no product categories worth more than USD 1 million exported to India and Bangladesh. This highlights the need to develop production capacities and export competencies in Central Asian countries.

5-table. The diversification of Central Asian exports to South Asia

Source: https://www.trademap.org/

Thus, there is a clear asymmetry in mutual trade: South Asian countries export to Central Asia far more actively than the other way around. At the same time, Central Asia has yet to fully capitalize on the opportunity presented by the growing demand in South Asian economies.

This indicates potential for expanding the export capabilities of Central Asian countries, particularly toward India and Pakistan, taking into account the growing economies of these countries and potential demand for both raw materials and processed goods. The development of a targeted export strategy based on regional specialization and the creation of value chains could play a key role in improving the region’s trade position.

The prospects for further trade growth directly depend on the development of transport connectivity, particularly the implementation of new routes through Afghanistan and the creation of multimodal logistics corridors. Simplifying trade procedures and removing regulatory barriers will also play a critical role, allowing the region’s countries to integrate more actively into the economic space of South Asia. Equally important will be the creation of a favorable business climate and institutional environment that supports the export of higher value-added products.

III. Development of transport and logistics infrastructure as a key factor in reviving dialogue and cooperation

In July 2021, Tashkent hosted the conference “Central and South Asia: Regional Connectivity. Challenges and Opportunities”, which was a turning point in recognizing the need to restore historical ties between the two regions.

In his speech at the conference, President of the Republic of Uzbekistan Shavkat Mirziyoyev emphasized that the creation of new transport and communication corridors is vital for the development of trade, strengthening security and expanding humanitarian ties[7].

The Termez-Mazar-e-Sharif-Kabul-Peshawar trans-Afghan railroad is seen as a strategic project aimed at strengthening the integration of Central and South Asia.

In July 2023, the final route of the Trans-Afghan railway corridor—Termez–Naybabod–Logar–Kharlachi—was agreed upon in Islamabad, and a roadmap for coordination of work was approved. This marked an important step in the transition from the conceptual phase to the practical implementation of the project aimed at strengthening transport connectivity between Central and South Asia.

The initiative is expected to serve as a powerful stimulus for economic growth, trade expansion, development of transport and logistics connections and increasing the region's export potential. The project, the idea of which originated in the early 2000s, received official support in 2017 with the signing of an intergovernmental agreement between Uzbekistan and Afghanistan.

The length of the new railroad will be approximately 600 km, and a projected capacity of 20 mln. tons of freight per year. Construction is scheduled to be completed by the end of 2027, with full operation by 2030[8].

The construction of the Trans-Afghan railway is estimated at approximately 5 bln. USD. Once operational, the route is expected to significantly reduce freight transit time between Pakistan and Uzbekistan—from the current 35 days to just 3–5 days. It is also anticipated that the cost of transporting a standard container will drop by nearly two-thirds, making the corridor especially attractive for businesses. According to forecasts, the freight volume along the new railway could eventually reach 10 million tons per year.[9]

At the same time, the successful implementation of the project requires addressing several serious challenges: ensuring security along the route, attracting sufficient investment, and harmonizing technical standards among the participating countries. The prospects of the Trans-Afghan Corridor directly depend on international coordination efforts and effective project management.

IV. Conclusions and strategic guidelines for deepening interconnectedness

The analysis of trade flows, infrastructure initiatives, and historical ties between Central and South Asia confirms the existence of a solid foundation and high potential for developing a strategic partnership.

Despite positive trends, mutual trade remains limited in both volume and product range, with a marked asymmetry in favor of South Asian countries. The development of transport connectivity - particularly through the implementation of cross-border corridors such as the Trans-Afghan Corridor - opens up opportunities to address these imbalances and stimulate economic flows.

At this stage, the key strategic guidelines should include:

- accelerated construction and commissioning of multimodal transport routes through Afghanistan;

- harmonization of technical, customs, and regulatory procedures;

- diversification of exports from Central Asia to South Asia, including high value-added goods;

- strengthened coordination among governments, international institutions, and the private sector.

These measures will help transform historical interconnectedness into a sustainable economic partnership that promotes regional stability and prosperity.

Amid global geo-economic shifts, enhancing interconnectedness between Central and South Asia is gaining not only economic but also strategic significance. Regional cooperation can become a powerful driver of sustainable development, reducing dependence on external markets and fostering the creation of domestic logistics and production chains.

Central Asia, leveraging its transit potential and growing economic ambitions, has a real opportunity to secure a prominent role in the new architecture of Eurasian connectivity.

Moreover, strengthening interregional connectivity and dialogue between Central and South Asia in conditions of a trust deficit and growing geopolitical confrontation will contribute to the transformation of the region into a zone of stability and sustainable development.

Babadjanov Muhammad,

Head of Department at the Institute for Macroeconomic and Regional Studies under the Cabinet of Ministers of the Republic of Uzbekistan