INST Corridor to get boost from PM's visit to Russia & Kazakhstan

Posted by Daily Shipping Times on 22-05-2017        Tweet

NEW DELHI Prime Minister Narendra Modi’s visit to Russia and subsequent trip to Kazakhstan early next month for the Shanghai Cooperation Organisation Summit are expected to give a major push to the International North South Transportation Corridor (INSTC) and other connectivity channels. India is eyeing these connectivity projects to enhance its presence in a region where China has expanded its wings to have a smooth connection with Europe as part of its One Belt One Road initiative.

On June 1, Modi and Russian President Vladimir Putin will jointly flag off a ceremonial motor rally from St Petersburg that plans to showcase connectivity between India and Russia along the INSTC route. INSTC, when it becomes operational, will ensure a smoother link than now between Mumbai and St Petersburg via Iran to realise the untapped economic potential the regions offer.

As it fast-tracks implementation of INSTC, India has bigger connectivity plans in the Eurasian and Central Asian region amid China’s OBOR projects.

INSTC, currently through Iran’s Bandar Abbas Port, could also get linked to the Chabahar Port which India is helping to expand, according to a joint study by think tank Institute of Defence Studies and Analyses and the Ladakh International Centre (LIC).

Delhi is also eyeing to connect INSTC with various other connectivity projects that the five Central Asian and other Eurasian countries have undertaken among themselves. The study will be launched ahead of Modi’s trip to Russia where the PM will hold the annual summit and be the Chief Guest at the St Petersburg International Economic Forum.

“INSTC is now becoming a reality. The Chabahar project launched in 2016 will complement INSTC. India is also exploring how the Chabahar connectivity corridor can be extended to connect with Central Asia through INSTC, or the Iran-Turkmenistan-Kazakhstan rail line, Iran-Uzbekistan-Kazakhstan alignment and

Trans-Afghan rail line (which possibly could be developed by Iran, India, Afghanistan and Uzbekistan),” said P Stobdan, India’s former envoy to Kyrgyzstan.

India could also fund the 700-km link between Mazari-Sharif and Herat in Afghanistan to get Central Asia connected with Chabahar and this could cost less than $2 billion, according to Stobdan. Uzbek railway has the capacity to build this link.

The absence of viable surface transport connectivity is a serious impediment to trade with the Eurasian region. Currently, transport of goods between India and Russia mostly takes place through the sea route via Rotterdam to St Petersburg.

In the case of the Central Asian region, goods are routed through China, Europe or Iran. The routes through China and Europe are long, expensive and time consuming. Therefore, a need was felt to have a logistics route that would be shorter, cheaper and faster. The INSTC agreement was signed by India, Iran and Russia in September 2000 to facilitate movement of goods via Iran, Caspian Sea and Astrakhan (a city on the Volga River close to the Caspian Sea) to Russia and adjoining countries of Eurasia.

Through this transportation route, Indian exports could potentially get a competitive advantage due to lower cost and less delivery time. Studies show that this route can reduce time and cost of container delivery by 30-40%. INSTC is the shortest Multi-Model transportation route linking the Indian Ocean and the Persian Gulf to the Caspian Sea via Iran and St Petersburg. From St Petersburg, North Europe via the Russian Federation is within easy reach. The estimated capacity of this corridor is 20-30 million tonnes of goods per year.

The INSTC has been expanded to include 11 new members: Azerbaijan, Armenia, Kazakhstan, Kyrgyz Republic, Tajikistan, Turkey, Ukraine, Belarus, Oman, Syria and Bulgaria (observer). China has established major road and rail links through some of these countries making it easier for its goods to be transported to Europe and vice-versa. India faces certain challenges in the Eurasian region. Trade operators and cargo agents currently find practical difficulties in border trade in these routes, officials said.