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The India-Middle East-Europe Economic Corridor (IMEC), announced on the sidelines of the G20 summit in New Delhi, apparently seeks to counter the controversial Belt and Road Initiative, a massive China-led infrastructure project that aims to stretch around the globe. The latest move may also help India redeem some of the losses made in a similar project, which fell prey to geopolitical tensions, diplomatic experts have indicated.
The IMEC will comprise an eastern corridor connecting India to the Gulf region, and a northern corridor connecting the Gulf region to Europe. It will include a railway and ship-rail transit network and road transport routes. Upon completion, it will provide a reliable and cost-effective network to supplement existing routes, enabling goods and services to transit to, from, and between India, the UAE, Saudi Arabia, Jordan, Israel, and Europe.
The IMEC may be seen as a pre-emptive move by New Delhi to cut its losses on the International North South Transport Corridor (INSTC), which remains effectively closed, the experts said.
The INSTC was India’s grand plan to cut short the time taken for trade shipments to reach Russia and Europe, and enter the central Asian markets. It included thousands of kilometres of all-weather highways from the Iranian port of Chabahar in the south, through Azerbaijan in the north, and onwards to Russia and Europe.
The route was also part of India’s efforts to establish greater connectivity and trade with the high-potential markets of the adjoining Commonwealth of Independent States (CIS) countries. A much-publicised node also connected Afghanistan to provide a trade route for the landlocked country, bypassing Pakistan. However, since its inception, the 7,200-km-long alternative trade route to Russia through the Iranian deserts has faced a series of difficulties.
The Federation of Freight Forwarders’ Association of India, which had conducted the first dry run through Azerbaijan back in 2014, had initially estimated that six months was required to popularise the new route after it opened. However, a slew of hurdles -- from the lack of loan facilities, inadequate insurance coverage for bill of lading, non-vessel operating common carrier, as well as irregular shipping services to Iran -- had slowed the process.
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After Afghanistan was overrun by the Taliban in 2021, it pulled out of the initiative. Finally, Russia’s invasion of Ukraine and a series of sanctions against it by the Western allies almost ‘killed’ the route. While India’s trade with Russia via the route has grown, its ultimate utility as a road to the European markets remains unfulfilled.
Whatever be the diplomatic reasons, industry executives and analysts expect the IMEC to have a major impact on investment sentiments and business opportunities for the infrastructure sector.
Vimal Kejriwal, managing director and chief executive officer of KEC International, expects the IMEC to give rise to new business opportunities. “This ambitious project will link railway and port facilities across the entire region and further enhance trade and connectivity while providing new business opportunities for the infrastructure industry,” he said.
Jagannarayan Padmanabhan, senior director and global head (consulting - transport, logistics & mobility, CRISIL Market Intelligence and Analytics, expects Maharashtra’s planned port at Vadhvan by the Jawaharlal Nehru Port Authority to be a major beneficiary of the IMEC. “The proposed economic corridor will help in building critical port infrastructure in India and will also help the Middle East in both sea and surface transport including rail infrastructure. It is only logical to assume that the west coast of the country will stand to gain from this development. We could see a significant benefit for the upcoming Vadhvan Port,” he said.
Padmanabhan also expects India to emerge as a major supplier, both in terms of technology and human capital, to the Middle East for construction of the corridor.
Rajiv Agarwal, managing director and chief executive officer for Essar Ports, said the corridor might position India as a central global hub for maritime commerce.