Table of Contents
India Mongolia investment opportunities are reaching unprecedented heights as bilateral trade between the two nations nearly doubled from USD 60 million in 2023 to USD 110 million in 2024.This remarkable surge comes as Mongolia’s Deputy Prime Minister S. Amarsaikhan extends a compelling invitation to Indian companies during the India-Mongolia Business Forum held in New Delhi on October 15, 2025.
The Deputy PM highlighted promising opportunities across multiple sectors, including mining, oil exploration, railroad development, manufacturing, and processing industries. With supporting infrastructure for oil exploration set to be commissioned within two years and India’s landmark $1.7 billion refinery project nearing completion, the timing couldn’t be better for Indian enterprises to establish their presence in this resource-rich Central Asian nation.
As both countries celebrate 70 years of diplomatic relations and a decade of strategic partnership, India Mongolia investment has emerged as a cornerstone of their bilateral cooperation, offering mutual benefits that extend far beyond commercial gains into strategic and geopolitical realms.
Mongolia Opens Doors for Indian Investment in Mining and Energy
Unprecedented Access to Resource-Rich Markets
Mongolia’s Deputy Prime Minister addressed the India-Mongolia Business Forum jointly organized by the Confederation of Indian Industry (CII), the Mongolian National Chamber of Commerce and Industry (MNCII), and the Embassy of Mongolia.The forum witnessed active participation from industry leaders and stakeholders from both countries, signaling serious intent from the business community.
Mongolia’s invitation encompasses diverse sectors beyond traditional mining and energy. Opportunities exist in animal husbandry processing, including wool, leather, and cashew value addition, tourism, healthcare, transport and logistics, banking and finance, ICT, disaster risk reduction, and standards and measurements.
Oil Exploration Infrastructure Development
The Deputy Prime Minister specifically invited Indian oil companies to explore and collaborate on Mongolia’s oil fields, noting that supporting infrastructure will be commissioned within two years.This timeline provides a clear roadmap for companies looking to enter the Mongolian energy sector.
The infrastructure development includes pipelines, storage facilities, and transportation networks that will make oil exploration commercially viable. For Indian companies with expertise in upstream oil and gas operations, this presents a greenfield opportunity in an emerging market.
Strategic Location and Market Access
Deputy PM Amarsaikhan emphasized Mongolia’s strategic location near major markets such as China and Russia, along with free trade agreements with Japan and other countries, offering India enhanced market access through Mongolia. This geographical advantage positions Mongolia as a potential land bridge for Indian businesses seeking entry into Northeast Asian markets.
The $1.7 Billion Oil Refinery: A Game-Changing Infrastructure Project
India’s Largest Overseas Development Partnership
The landmark oil refinery project represents Mongolia’s first and only such facility, financed by the Government of India with an investment of $1.7 billion. Extended through a Line of Credit via EXIM Bank, this project stands as India’s largest overseas development partnership to date.
Once operational, the refinery is expected to meet at least 50 percent of Mongolia’s demand for petroleum products. This massive infrastructure undertaking demonstrates India’s commitment to Mongolia’s economic development and energy security.
Indian Companies Leading Construction
The construction of non-technical buildings is being carried out by JMC Projects India, with work process at 80.3 percent completion. Megha Engineering and Infrastructure Limited (MEIL) is executing the construction work of primary facilities and the industrial power plant.
MEIL has secured three major packages for the refinery project:
EPC-2 encompasses open art units, utilities, offsites, and plant buildings valued at USD 598.90 million, while EPC-3 involves captive power plant construction valued at USD 189.72 million. The company secured a third package, EPC-4, valued at USD 648 million for crude oil refinery plant construction.
Refinery Specifications and Capacity
The plant is being built in Altanshiree sum of Dornogovi Province and has capacity to process 1.5 million tonnes of oil per year. The refinery will supply 55 percent of total domestic fuel demand and contribute to reducing oil imports.
As many as 55 pressure vessels are being exported from the MEIL manufacturing facility in Hyderabad by May 2025 for the 1.5 million tonne refinery project. The refinery is expected to be commissioned in 2027, marking a major milestone in India-Mongolia cooperation.
Strategic Mining Opportunities: Coal, Copper, and Critical Minerals
Vast Mineral Reserves Await Development
Ambassador Atul Malhari Gotsurve spoke about the vast potential for mining cooperation, citing Mongolia’s rich reserves of coking coal, gold, copper, and other critical minerals. Mongolia has around seven billion tonnes of coking coal reserves, among the world’s largest, with reserves of 35 million tonnes of copper and estimated 31 million tonnes of rare earths.
For India, the world’s largest steel maker, access to Mongolian coking coal represents a strategic imperative. Coking coal is a key feedstock in steelmaking and India is dependent on Australia, Russia, and the US for supplies. Diversifying supply sources through Mongolia enhances India’s energy security.
Major Indian Companies Eyeing Mongolian Minerals
Indian mining companies such as Hindalco, Adani, and Vedanta have expressed interest in importing copper from Mongolia. JSW Steel and Steel Authority of India (SAIL) are actively pursuing negotiations with Mongolian authorities for coking coal imports.
Key minerals available for investment include:
- Coking Coal: 7 billion tonnes of reserves
- Copper: 35 million tonnes of reserves
- Gold: Significant deposits across multiple sites
- Rare Earth Elements: 31 million tonnes estimated reserves
- Iron and Zinc: Additional strategic reserves
Transportation Logistics and Routes
India is clear about not transporting minerals through China and would prefer routing through Russia, with Mongolia having access to Vladivostok Port in Russia’s Far East. Mongolia’s special treaty with Russia offers tariff rebates of 50-60 percent on goods transported to Russia, presenting export opportunities for Indian businesses.
The International North South Transport Corridor and the Vladivostok to Chennai shipping route are being operationalized to facilitate mineral transportation. These logistics solutions make India Mongolia investment in mining commercially viable despite geographical challenges.
Railroad and Manufacturing: Building Connectivity Infrastructure
Railroad Exploration and Development
Deputy PM Amarsaikhan highlighted huge opportunities in railroad exploration as one of the priority sectors for Indian investment. Mongolia’s vast territory spanning four times the size of France requires extensive rail infrastructure to connect mining sites with ports and processing facilities.
Indian companies with expertise in railway construction, signaling systems, and rolling stock manufacturing can play a crucial role in developing Mongolia’s rail network. This infrastructure development will be essential for transporting minerals and facilitating broader economic activities.
Manufacturing and Processing Industries
Mongolia seeks to move beyond raw material exports toward value-added manufacturing. Opportunities exist in animal husbandry processing including wool, leather, and cashew value addition, representing downstream manufacturing potential.
Manufacturing sectors open for investment:
- Agricultural processing and food technology
- Textile and leather goods manufacturing
- Metal processing and fabrication units
- Pharmaceutical production facilities
- Automobile assembly and component manufacturing
The automobile and pharmaceutical sectors were identified as areas ripe for collaboration during the business forum. Indian companies with established manufacturing capabilities can establish joint ventures or wholly-owned subsidiaries to serve both Mongolian domestic demand and export markets.
Technology Transfer and Skill Development
PM Modi underscored India’s cooperation in skill development for Mongolia’s youth, with the private sector exploring possibilities in energy, critical minerals, rare earths, digital, mining, agriculture, dairy, and cooperatives. This human capital development creates opportunities for Indian educational institutions and training providers.
India-Mongolia Trade Doubles: A Partnership on the Rise
Exponential Growth in Bilateral Commerce
Bilateral trade between India and Mongolia nearly doubled in just one year, rising from USD 60 million in 2023 to USD 110 million in 2024. This 83 percent increase reflects deepening economic cooperation as both nations celebrate 70 years of diplomatic relations.
Ambassador Atul Malhari Gotsurve stated that the surge in trade demonstrates strengthening partnership across multiple sectors including mining, renewable energy, and cultural exchange. The momentum suggests bilateral trade could cross USD 200 million by 2026 if current trends continue.
Key Sectors Driving Trade Growth
The India Mongolia investment boom spans multiple sectors:
Energy and Resources:
- Oil refinery equipment and machinery
- Mining technology and equipment
- Renewable energy solutions
- Power generation infrastructure
Manufacturing and Processing:
- Pharmaceutical products
- Automobile components
- Agricultural machinery
- Processed foods
Services and Technology:
- IT and software services
- Healthcare and medical tourism
- Education and training services
- Financial services and banking
Government Support and Policy Framework
PM Narendra Modi announced the introduction of free e-visas for Mongolian citizens to strengthen people-to-people contacts. A Memorandum of Understanding between Ladakh’s Autonomous Hill Development Council and Mongolia’s Arkhangai Province promotes enhanced exchanges.
India and Mongolia signed 10 agreements during the Mongolian President’s state visit, including one on geological exploration. These policy measures create an enabling environment for businesses to operate seamlessly across borders.
Third Neighbour Policy: Mongolia’s Strategic Positioning
Understanding Mongolia’s Foreign Policy Framework
Mongolia’s multilateral, open, and transparent foreign policy is guided by the Third Neighbour Policy, which places India among its most highly valued partners. The term ‘third neighbor’ refers to countries other than Russia and China that Mongolia has built relationships with.
The concept was first mentioned by US Secretary of State James Baker during his visit in August 1990 and was subsequently formalized in Mongolian foreign policy and legislation. India’s position as a spiritual neighbor through Buddhism gives it unique standing in this framework.
Strategic Importance for India’s Indo-Pacific Vision
Deputy PM Amarsaikhan emphasized Mongolia’s potential as a vital land bridge for India’s Indo-Pacific foreign policy. India remains Mongolia’s Third Neighbor, promoting stability and economic diversification beyond its two geographic neighbours, China and Russia, while enhancing India’s Act East and Indo-Pacific vision.
This strategic alignment extends beyond economics into defense cooperation. New Delhi announced it will post a defense attaché in Ulaanbaatar and launch a new capacity-building programme for Mongolia’s border security forces.
Balancing Regional Geopolitics
India and Mongolia are two countries whose strategic posture remains highly impacted by the continued cementation of the Beijing-Moscow axis. Their expanding strategic partnership serves mutual interests in maintaining independence and diversifying external relationships.
Strategic benefits for both nations:
- Energy security through diversified supply chains
- Access to critical minerals outside Chinese control
- Enhanced defense and security cooperation
- Cultural and spiritual ties strengthening soft power
- Economic resilience through expanded trade
Future Outlook: Why Indian Companies Should Act Now
First-Mover Advantages in Emerging Sectors
The current phase represents a golden window for India Mongolia investment. With infrastructure being developed and regulatory frameworks being established, early entrants can secure preferential positions in key sectors.
In 2024, foreign direct investment into Mongolia increased to USD 177 million, up from previous years. However, this figure remains modest compared to Mongolia’s potential, suggesting significant room for growth.
Competitive Advantages for Indian Firms
Indian companies bring specific strengths that align well with Mongolian needs:
Technical Expertise: Proven capabilities in mining, oil refining, and infrastructure development demonstrated through successful domestic projects.
Cost Competitiveness: Indian engineering and construction services offer excellent value propositions compared to Western competitors.
Cultural Affinity: Shared Buddhist heritage and strategic partnership create trust and facilitate business relationships.
Government Support: Strong bilateral frameworks and state backing reduce investment risks.
Timeline for Key Developments
2025-2026:
- Oil refinery infrastructure commissioning
- First shipments of Mongolian coking coal to India
- Expansion of mining exploration agreements
- Launch of new manufacturing joint ventures
2027-2028:
- Full operationalization of oil refinery
- Railway connectivity projects beginning
- Establishment of processing facilities
- Significant increase in bilateral trade volume
Risk Mitigation Through Strategic Planning
While opportunities abound, investors should consider several factors:
Logistical Challenges: Mongolia’s landlocked position requires robust transportation planning and partnerships with Russia for port access.
Climate Considerations: The Mongol Refinery is being executed under extreme climatic conditions, with temperatures ranging from minus 35 degrees C to plus 40 degrees C.
Market Size: Mongolia’s population of only 3.4 million limits domestic market potential, making export orientation essential for large-scale projects.
Geopolitical Sensitivity: Balancing relationships with China and Russia requires diplomatic finesse and strategic alignment with Mongolian foreign policy objectives.
Conclusion
India Mongolia investment represents one of the most promising bilateral economic partnerships in Asia’s emerging markets landscape. The growing strategic and economic partnership between India and Mongolia, guided by Mongolia’s Third Neighbour Policy, positions India as a highly valued partner.
With bilateral trade doubling to USD 110 million in 2024, a $1.7 billion oil refinery nearing completion, and vast mineral reserves awaiting development, the opportunity matrix is compelling. The forum witnessed active participation from industry leaders with discussions centered around agribusiness, infrastructure, renewable energy, transport corridors, gold refinery, and critical minerals.
Indian companies across sectors—from mining giants like Adani and Vedanta to infrastructure leaders like MEIL and JMC Projects—are already establishing their presence. The next five years will be crucial for consolidating these gains and expanding into new territories.
For business leaders, policymakers, and investors looking to diversify their international portfolios while supporting strategic national interests, Mongolia offers a unique combination of resource wealth, strategic positioning, and receptive government policies. The time to act is now, as supporting infrastructure for oil exploration will be commissioned within two years and first-mover advantages remain available across multiple sectors.
Frequently Asked Questions
Q1: What are the main sectors open for India Mongolia investment?
Mining and minerals exploration, oil and gas development, railroad infrastructure, manufacturing and processing industries, renewable energy, agriculture, pharmaceuticals, and ICT are the primary sectors welcoming Indian investment in Mongolia.
Q2: How will Indian companies transport minerals from landlocked Mongolia?
Indian companies prefer routing minerals through Russia using Vladivostok Port, which offers 50-60 percent tariff rebates under Mongolia’s special treaty with Russia. The Vladivostok to Chennai shipping route is being operationalized for this purpose.
Q3: What is the current status of India’s $1.7 billion refinery project in Mongolia?
The refinery construction is in advanced stages with Indian companies MEIL and JMC Projects handling different packages. The facility is expected to be commissioned in 2027 and will meet 50 percent of Mongolia’s petroleum demand with 1.5 million tonnes annual capacity.
Q4: Why is Mongolia important for India’s strategic interests?
Mongolia serves as a vital land bridge for India’s Indo-Pacific foreign policy, provides access to critical minerals outside Chinese control, offers market access to Northeast Asia through its strategic location, and strengthens India’s Third Neighbour status in Central Asia.
Q5: What government support is available for Indian companies investing in Mongolia?
The Indian government provides concessional loans through EXIM Bank, has signed 10 bilateral agreements including geological exploration, offers diplomatic support through embassies, and has established joint working groups for mining and other sectors.
Q6: How has India-Mongolia bilateral trade performed recently?
Bilateral trade nearly doubled from USD 60 million in 2023 to USD 110 million in 2024, marking 83 percent growth. This surge reflects deepening economic cooperation across mining, energy, and manufacturing sectors.
Q7: What are the unique challenges of operating in Mongolia?
Extreme climatic conditions with temperatures from minus 35°C to plus 40°C, landlocked geography requiring complex logistics, limited domestic market of 3.4 million population, and need to balance geopolitical sensitivities with Russia and China are key challenges.
Group Media Publication
Construction, Infrastructure, and Mining
General News Platforms – IHTLive.com
Entertainment News Platforms – https://anyflix.in/
Powered By: Super-fast and reliable streaming is delivered by Bunny CDN.
Explore: https://bunny.net/?ref=i33ljelh4w
