External Affairs Minister S. Jaishankar's recent East Asia tour, which included an official visit to Mongolia on 22-23 June, has spotlighted a deepening strategic partnership that analysts say opens significant economic opportunities for the landlocked nation. According to a report in international magazine The Diplomat, India's expanding engagement across technology, trade, supply chain resilience, and soft power aligns closely with Mongolia's development goals — positioning New Delhi as a pivotal third-neighbour partner.

Strategic Foundations of the Partnership

The June 22-23 visit by EAM Jaishankar was rooted in the 10-year strategic roadmap established in 2025 during Mongolian President Khurelsukh Ukhnaa's State Visit to New Delhi. In his press statement following the visit, Jaishankar described Mongolia and India as 'strategic partners' and 'spiritual siblings' — language that signals a relationship extending well beyond transactional diplomacy.

The report noted that the two countries' shared non-bloc foreign policy orientation reinforces their complementary economic and growth strategies, giving both nations room to manoeuvre in an increasingly polarised geopolitical environment.

The Flagship Oil Refinery Project

A centrepiece of the bilateral economic relationship is the Mongol Oil Refinery in Dornogovi Province, which Jaishankar toured on 22 June. India is financing Mongolia's first-ever greenfield oil refinery under a USD 1.7 billion line of credit. Once operational, the refinery is expected to become Mongolia's second-largest foreign investment project after Rio Tinto's Oyu Tolgoi mine.

According to The Diplomat's report, the refinery is 'one of the largest investments being financed by Mongolia's third neighbours outside of the mining sector.' Its completion is described as 'highly anticipated by both Mongolia and India' for its potential to diversify Mongolia's limited and heavily mining-dependent market.

Coal Trade and Mining Sector Potential

Beyond the refinery, India has emerged as a possible third export destination for Mongolia's coking coal industry. Given India's rising demand for coal to fuel its steel sector and broader industrial advancement, Jaishankar reportedly expressed interest in exploring logistical pathways for Mongolia to export coking coal and other mining products to India. This would offer Mongolia a meaningful alternative to its current dependence on Chinese and Russian trade routes.

Soft Power and Cultural Diplomacy

The bilateral relationship is not limited to hard economics. The report highlighted that India and Mongolia have increasingly leaned on cultural diplomacy, shared religious heritage — particularly Buddhist ties — and educational cooperation as cornerstones of their engagement. These soft power channels reinforce goodwill and provide a stable foundation for deeper economic integration.

Mongolia's Foreign Ministry underlined the significance of the visit, stating: 'This visit is of great significance in strengthening the Strategic Partnership between the two countries, enriching trade and economic cooperation with new ideas and links, and determining the direction of future cooperation.'

Mongolia in India's Act East Policy

The report positions Mongolia as an increasingly important pillar of Prime Minister Narendra Modi's Act East Policy, which spans digital and physical connectivity, defence partnerships, economic integration, and cultural diplomacy. As Mongolia seeks greater investment from third-neighbour countries to reduce its dependence on China and Russia, India's role as a credible and non-aligned partner is expected to grow in the years ahead.