India’s trade with Russia is about to get considerably cheaper and quicker, with Iran set to become a key hub of a new transport corridor.
On July 5, in a series of high-level talks, India urged Iran to activate the 7,200-kilometre International North-South Transportation Corridor (INSTC), The Tribune newspaper reported.
INSTC is a multimodal transportation network of sea, road, and rail routes between Russia and India, two countries that notched up bilateral trade of up to $13 billion (about 1 lakh crore rupees) at the end of 2021. Following the breaking out of the Ukraine war, this trade doubled down on oil and other commodities.
Dozen-odd central Asian countries like Armenia, Azerbaijan, and Georgia, besides southern Russia, too, will benefit from trade through INSTC.
Avoiding key trade stumbling blocks
Dry runs have shown transit time falling by up to 25 days from the earlier 40-45 on this route, bringing down carriage costs by 30%. INSTC is also sanctions-free since it is an alternative to the Suez Canal and is not dominated by Western countries.
“Interestingly, all 18-odd countries touched by the INSTC route have never been active backers of unilateral sanctions announced periodically by the West,” The Tribune reported. Of late, trade links within the region have been disrupted due to western sanctions on Russia and Iran.
Russia has begun transporting full-container trains to India through the eastern branch of the INSTC, The Economic Times reported.
In the long run, the INSTC could be an alternative to traditional routes such as Suez Canal, the Mediterranean, and the Bosporus.
India, meanwhile, has requested for Iran’s Chabahar Port—India played a role in building this facility—to be brought under INSTC. This will provide sea access to Afghanistan and emerge as a commercial transit hub for the region.
Besides, India’s relations with Iran are crucial given its dependence on Iranian crude oil, despite the US sanctions leaving things in disarray. Even geographically, Iran holds importance as it provides an alternate route to Afghanistan and central Asia, avoiding Pakistan.