Central Asian and East European markets to get closer to India by new trade route via Iran and Russia

 

In order to enhance trade and connectivity, India, Russia and Iran are now planning to launch a new cargo transport corridor, which would be a cheaper and shorter alternative to the Suez Canal or the China route and is expected to reduce transport costs by $2500 per 15 tons of cargo, besides reducing the travel time by nearly half. The new International North-South Transport Corridor (INSTC), when it comes into effect, will bring Central Asian and East European markets much closer to India, thus enhancing bilateral trade opportunities between the two regions.

INSTC is a 7,200 km long multi-mode network of ship, rail and road route for moving freight between India, Iran, Afghanistan, Armenia, Azerbaijan, Russia, Central Asia and Eastern European countries. The route primarily involves moving freight from India, Iran, Azerbaijan and Russia via ship, rail and road.

 Once it gets commenced, INSTC will enhance trade connectivity between major cities such as Mumbai, Moscow, Tehran, Baku, Bandar Abbas, Astrakhan, Bandar Anzali and many more. Cargoes from India will be delivered to the Iranian port of Bandar Abbas. The goods will subsequently be transported by land to Bandar Anzali on the Caspian Sea. The cargo will then be shipped to the Astrakhan Port of Russia and will then be moved to their destination in Russia, East Europe or Central Asian countries.

This corridor is estimated to have a capacity of 20-30 million tons of goods per year and will be a cheaper and time-saving alternative to routes via China and Europe, which are not only long but also time-consuming and expensive, thus making this new corridor the most viable route to Central Asian and East European countries including Russia.

The new shipment passage is an important initiative taken by India, Russia and Iran to enhance connectivity and promote transport cooperation among these nations. India is keen to move ahead with this project despite American sanctions against both Russia and Iran, as this route not only reduces India’s dependence on China but also is a suitable alternative to much bigger China’s Belt-and-Road project. China’s Belt-and-Road initiative is trying to connect Arabian Sea via Pakistan and is trying to reach closer to the Indian Ocean through passing through various countries in the East.

The Indian Ambassador to Russia, DB Venkatesh Varma has recently visited the Astrakhan region to see the preparations of the Russian authorities to develop the port. Dry runs of the two routes forming part of the ambitious projects were conducted as far back as 2014; the first was Mumbai to Baku via Bandar Abbas and second was Mumbai to Astrakhan via Bandar Abbas, Tehran and Bandar Anzali. The objective of the study was to identify and address key bottlenecks. Apparently the Astrakhan route has found greater favour.

The route, once gets into operation, will make it very lucrative for East Asia and South East Asia exporters. Exporters from India’s west coast would be able to send their goods through Iran’s Bandar Abbas and Chabahar ports, Central Asian states, Russia and onwards to Europe. It will bring the Eurasia region much closer and cost-effective. There is enormous potential and it is likely that the INSTC will be activated before 2020.