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What is happening?
India and Mongolia—two countries whose strategic posture remains highly impacted by the continued cementation of the Beijing-Moscow axis—are expanding their strategic partnership, as evidenced by the early February talks on border protection. New Delhi and Ulaanbaatar agreed to organize joint exercises and bolster bilateral cooperation on frontier protection. This development is taking place amid a broader expansion of India-Mongolia cooperation, which also includes a forthcoming deal on natural resource procurement—Mongolian copper and coking coal could help India meet the growing demand in its power, construction, and steelmaking sectors.
Historically, the shared Buddhist heritage connected the two countries as “spiritual neighbors.” Nowadays, we increasingly see a strategic dimension to this partnership. Recognizing the complicated relations between New Delhi and Ulaanbaatar with their common neighbor, the People’s Republic of China, their bilateral ties play an increasingly important role in their respective “Act East” and “Third Neighbor” policies.
What is the broader picture?
Rooted in historical ties and strengthened by strategic cooperation across multiple domains, the partnership between New Delhi and Ulaanbaatar is robust and continues to evolve. As Mongolia has positioned itself firmly as a pivotal partner in India’s broader regional outreach, the South Asian country has increasingly prioritized its engagement with Ulaanbaatar through collaborative projects in economic, defense, and energy domains.
One of the most significant aspects of this relationship is India’s role in Mongolia’s economic development, particularly through developmental assistance. India has extended approximately 1 billion USD in credit to support the construction of Mongolia’s first petroleum oil refinery, a transformative project that will enhance Ulaanbaatar’s energy security and reduce its dependence on fuel imports. This initiative aligns with India’s broader approach to utilizing its Lines of Credit to finance strategic infrastructure projects that bolster trade and economic ties with its key partners.
Defense cooperation is another pillar of India-Mongolia relations, shaped in part by both nations’ complex interactions with their shared neighbor, China. India and Mongolia engage in regular security dialogues through the India-Mongolia Joint Working Group for Defense Cooperation, which meets annually—the most recent session being held in Ulaanbaatar in May 2024. Additionally, India has supported Mongolia’s defense capabilities by assisting in the establishment of a Cyber Security Training Center at Mongolia’s National Defense University, reinforcing bilateral security collaboration.
Natural resources also play a crucial role in strengthening India-Mongolia ties. Mongolia’s economy is heavily reliant on extractive industries, with mining contributing approximately 23 percent of its GDP. In an effort to diversify its economic dependencies, Mongolia has sought to expand its export markets, making the forthcoming copper and coal trade agreements with India particularly valuable. Notably, both countries have agreed to bypass the more direct transit route through China, instead opting to transport Mongolian resources via Russia’s Vladivostok port. This logistical choice underscores the strategic nature of their partnership, reflecting a shared interest in reducing economic and political vulnerabilities associated with China’s assertive regional posture.
Overall, India and Mongolia continue to deepen their cooperation, leveraging economic investments, defense collaboration, and resource partnerships to build a resilient and mutually beneficial relationship.
Why does it matter?
Apprehensive about the emergence of “New Cold War” dynamics, Mongolian prime minister likened the growing divide between the “collective West” and the Beijing-Moscow axis to a divorce. “When the parents divorce, the children are the ones who get hurt the most,” said Luvsannamsrain Oyun-Erdene. With Ulaanbaatar sees itself as a child of two parents who are increasingly distant, it embarks on a soft balancing against Beijing and Moscow in its foreign policy outreach. In turn, this highlights complementarity with India’s balancing against China and provides fertile ground for cooperation between both countries.
Consequently, we can expect further expansion of relations between New Delhi and Ulaanbaatar in domains that transgress traditional linkages bridging the “spiritual neighbors” through shared Buddhist heritage, and broadening their substantive exchanges in light of growing regional volatility. In particular, defense industrial cooperation might prove to be a particularly lucrative field for both sides, considering India’s comparative advantage in this domain and existing defense cooperation frameworks.
