Why the International North South Transport Corridor connecting India to Russia has become hot property

This connectivity project originally conceived by India, Iran and Russia in 2000 has been a long time in the coming. It was only last year that the first freight travelled from Russia to India via the corridor. (Representational image)

During a recent phone call, Prime Minister Narendra Modi and Iranian President Ebrahim Raisi discussed the realisation of the Chabahar Port as a connectivity hub. India has committed $85 million to the strategic port on Iran’s southeastern coast and surrounding free trade zone.

Since December 2018, India Ports Global Chabahar Free Zone (IPGCFZ), a special purpose vehicle of India Ports Global Limited, has been operating its Shahid Beheshti Terminal. The port enables easier Indian access to Afghanistan and landlocked Central Asia bypassing Pakistan, as well as a counter to the Gwadar Port which China has developed there as part of the China-Pakistan Economic Corridor, a flagship project of its ambitious Belt and Road Initiative (BRI).

Why INSTC After Chabahar

Following the phone call Raisi’s office issued a statement saying “The President described it important to develop interactions with India, especially in the fields of transit and energy and regional security, and demanded the development of transportation cooperation, including in the North-South Corridor, and the acceleration of the operationalisation of Chabahar Port facilities.” Both Raisi and Modi also met at the BRICS summit in South Africa.

Chabahar Port’s utility and significance is tied to the International North South Transport Corridor (INSTC), which connects Indian ports to those of the Russian Federation through a 72,00 km long multi-modal transport corridor, including shipping, road and rail, through Iran and the Caspian Sea.

This connectivity project originally conceived by India, Iran and Russia in 2000 has been a long time in the coming. It was only last year that the first freight travelled from Russia to India via the corridor. Yet, its importance can be gauged from the fact that in the interim ten more countries officially joined it – Azerbaijan, Armenia, Belarus, Oman, Kazakhstan, Kyrgyzstan, Tajikistan, Turkey, Syria, and Ukraine. More countries have evinced interest in joining the INSTC.

Big Advantages For India

The INSTC is the shortest trade route connecting India with Russia. A 2014 study by the Federation of Freight Forwarders’ Association of India found that the INSTC was 30 percent cheaper and 40 percent shorter than the traditional Suez route, reducing transit time to an average of 23 days for Europe-bound shipments from the traditional 45-60 days.

The 2021 blockage of the Suez Canal has further served to highlight the INSTC as a necessary if not better alternative to the Canal. Further, the corridor has the potential to turn partner countries into logistics and transit hubs, massively increase regional trade and development, and give India access to Central Asia’s rich energy resources.

International sanctions on Iran were a major impediment to the INSTC’s slow pace. Another reason is funding. Unlike China’s BRI, the INSTC has no one single source of funding but depends on partner states.

This, however, also makes the INSTC an equal opportunity player, unlike the BRI, which has snared many member countries into China’s debt trap. For India, the INSTC has the potential to outflank China’s BRI. With the signing of the Joint Comprehensive Plan Of Action (2015), India moved ahead with Chabahar.

Can Russia-Iran-India Get INSTC Going?

The war in Ukraine has opened up new opportunities for the INSTC. Unprecedented sanctions on Russia have deepened cooperation with Iran. Both countries have recently signed an agreement for the construction of the Rasht-Astara Railway along the INSTC.

Secondly, the sanctions on Russia, whose territory served as a transit zone for many Central Asian countries, as well as for China, has led to the rise of alternate trade routes like the Middle Corridor. China has also halted all BRI-related work in Russia.

All this has spurred greater commitment from Russia to accelerate infrastructure development both on its territory, and eliminate legal and logistical hurdles that currently prevail along the corridor. A session on the INSTC at the St Petersburg International Economic Forum earlier this year concluded that freight traffic along the corridor will continue to grow to projections of 6.5 million tonnes by 2030.

The current Iranian administration has vowed to complete the construction operation of the  INSTC during its tenure. India also needs to stay the course. The corridor remains riddled with multiple issues like outdated infrastructure, tax, administrative and other barriers, and needs concerted effort by all parties concerned.

India has shown its resolve at a time of great geopolitical flux. It has not caved into unilateral sanctions and is determined to engage with both Russia and Iran. Once completed the Persian Gulf and the Sea of Oman, which have direct access to free waters, will be connected to the North Sea and Caspian Sea littoral states via rail and road.

There is unlimited opportunity in this for India.

Aditi Bhaduri is a journalist and political analyst. Views are personal, and do not represent the stand of this publication.