The war in Gaza has taken India unawares and the heat is already being felt.
First, and this may well be a major cause for the Hamas attacks on Israel on 7 October, the ambitious India Middle East Europe Economic Corridor (IMEC), announced during the G20 summit in Delhi earlier this year, has had to be put on the back burner. US President Joe Biden clearly articulated this.
The IMEC would have cut freight costs and time between India and Europe. Participating countries, no doubt will and indeed should resume with the Corridor once the war is over, but it will probably not be any time soon.
Additionally, the Houthi attacks on cargo ships in the Red Sea have majorly affected global shipping and trade as major shipping companies have stopped using the route through the Suez Canal. According to estimates, this could curtail global shipping capacity by 20 per cent. At least 121 containerships are taking longer routes to avoid the Suez Canal and the Red Sea. But there is more.
How INSTC Facilitates India’s Trade Connectivity
On 23 December, the MV Chem Pluto, carrying 21 Indians and one Vietnamese crew was attacked in the Red Sea. Preliminary investigations into the damages show a drone attack.
The red dots depict spots on the Red Sea where ships have been attacked.
(Information: media reports)
In response, the Indian Navy has deployed guided missile destroyers – the INS Mormugao, the INS Kochi, and INS Kolkata "in various areas to maintain a deterrent presence" according to a statement issued by the Indian Navy. All of this only brings the focus back to alternate trade corridors, in particular the International North-South Transport Corridor (INSTC).
The INSTC is a multimodal transport corridor that includes shipping, road, and rail, connecting Indian ports to those of the Russian Federation through Iran and the Caspian Sea. This connectivity project was originally conceived by India, Iran, and Russia in 2000.
It was only last year that the first freight travelled from Russia to India via the corridor. Yet, it is also 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 per cent cheaper and 40 per cent 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 disruptions caused to shipping through the Suez last year and now because of the Houthis, further underscores the salience of this corridor. India's investment into Iran's Chabahar port also can be utilised now through the INSTC, since the Taliban's return to Kabul has put the original objective of the investments under a question mark.
No coincidence then that on 27 December in his press conference in Moscow, External Affairs Minister S Jaishankar made a reference to the INSTC.
How India-Armenia Ties May Impact the Project
The corridor has to work out a host of issues like infrastructure, taxes, etc. The good news is that both Iran and Russia – the other two significant stakeholders in the corridor – are also refocusing on the corridor.
To that end, both Iran and Russia have started work on the 170 kilometre Iranian Rasht-Astara railway line – an important link in the corridor which traverses Azerbaijan territory. Besides India, Iran, and Russia, about 11 more countries have signed onto the corridor, including South Caucasian arch-rivals Armenia and Azerbaijan.
Recently, the Indian media was agog with reports that the INSTC would run through friendly Armenia now rather than through Azerbaijan, which has been needling India periodically with its statements on Kashmir.
This is actually nothing new. More than a year ago, the Indian Ambassador in Tehran was reported to have confirmed the same, something Iranians had also announced. Both Iran and India have a complicated relationship with Azerbaijan but friendly ties with Armenia and such a proposal seemed logical.
At the first India-Iran-Armenia trilateral meeting in Yerevan earlier this year in April, the three countries had again pledged to cooperate on connectivity issues. Armenia had also signed on to the Chabahar port project.
However, this is easier said than done.
Can India Sponsor the INSTC Project?
Tremendous infrastructure development work needs to be undertaken in Armenia to actualise the INSTC through it. An Indian diplomat who had been posted in Armenia sometime ago said that the country currently lacks both the necessary wherewithal as well as the resources required to develop such infrastructure.
Since Iran too seems to be lacking such resources – the Rasht-Astara railway, amounting to some USD 1.6 billion is in large part being financed by Russia. It would seem to be India’s lot to help finance infrastructure there. Will and can India do it is the question. For its part, Armenia recently announced that it had earmarked funds for infrastructural development for turning itself into a connectivity hub.
If India, does resolve to, at least partly finance such development work in Armenia, benefits would accrue to it.
For one, western sanctions on Russia have spurred the rise of the Trans-Caspian International Transport Route or the more commonly called "Middle Corridor" which connects China through Kazakhstan via Azerbaijan and Georgia to Turkiye. The corridor allowed Kazakhstan to ship oil to Turkiye bypassing Russian territory, as well as Chinese access to Europe without transiting through the Russian Federation.
The EU is also heavily invested in this corridor. Developing an alternate route along the INSTC does not preclude using the route through Azerbaijan either but India would have more than one option.
Secondly, developing this option would allow both India and Iran to counter the Zangezur Corridor in the form that Turkiye and Azerbaijan are pushing for and on which I had written about earlier in this column.
Finally, developing infrastructure through Armenia will provide India a route through Georgia to the Black Sea and further to Europe, as an alternative to the Suez Canal whose vulnerabilities have repeatedly been demonstrated past couple of years.
Will India resolve to develop such infrastructure in a country it has assiduously been cultivating relations with? And will Armenia cooperate by allowing India an advantage in this? That is what needs to be seen.
(Aditi Bhaduri is a journalist and political analyst. She tweets @aditijan. This is an opinion piece. The views expressed above are the author’s own. The Quint neither endorses nor is responsible for them.)
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