The essentials of G20's corridor initiative

From trade to diplomacy, there is much to commend in the India-Middle East-Europe Corridor

Of the many announcements emanating from the G20 gathering in Delhi in September, the one that has evoked widespread curiosity is the IMEE Corridor. Here are 10 popular queries with their answers.

What is the IMEE Corridor?

Well, the full form is the India-Middle East-Europe Corridor. Essentially, it is a transportation link starting in Mumbai from where goods will be sent by ship to Dubai Port. They will then be transported by rail from Dubai Port to Haifa Port in Israel (via Jordan), and then by ship again to the port of Piraeus in Greece. From there, they will travel overland by road or rail to Hamburg in Germany. The project has eight key stakeholders — India, the UAE, Saudi Arabia, Italy, France, Germany, the USA and the European Union, all of whom have been signatories to the MoU released during G20. Israel is an enthusiastic “partner.”

What kind of Corridor is it?

The answer hinges on whether it is envisaged merely as a logistics corridor, or it is meant to flower into an economic corridor. At this stage, the bet is on the latter, as the former does not quite make the cut. A ship can easily transport a container from Mumbai to Hamburg more cost-effectively. However, it is believed that a new thrust will be given for trade among all the countries the IMEEC passes through, and a “logistics corridor” to start with will ultimately morph into an “economic corridor.”

How is it different from a similar Chinese initiative?

The Chinese announced the Belt-and-Road Initiative (BRI) 10 years ago. It drew gasps of wonderment then, as it sought to encompass over 100 countries in its fold across south and Southeast Asia, Central Asia, Eastern Europe, and the African continent. Its string of projects across this vast terrain encompassed ports, roads, airports, and industrial parks. Most importantly, the Chinese held out the promise of cheap, long-term funds for infrastructure development. However, the BRI initiative has faced some criticism recently as many of the beneficiary countries are realising that they are falling into a debt trap. However, the BRI is still quite robust with a number of projects around the world.

Why does it originate from Mumbai if there is a larger regional play?

It is clear that India, as the emergent third-largest economy is the bulwark of the plan. But it would be desirable for surrounding nations to be involved too as part of sub-continental India. So, the line from Mumbai could well be stretched to Chittagong and Colombo ports, taking into account India’s proposed International Container Transhipment Port in the Andamans. Recent reports also mention the inclusion of western-Indian ports of Kandla, JNPT (Navi Mumbai) and Mundra. Moreover, with the African Union having been invited into the G20 club, it would be desirable to link this continent too by starting with some east-African ports.

Is it only about the flow of physical goods?

Not necessarily. The initial vision is extended to cover energy flows too. India today buys hydropower from Bhutan and sells thermal power to Bangladesh. A dedicated power-line to Sri Lanka has been discussed. More importantly, the focus on renewables should make a cross-border transmission grid attractive as sunset in Bangladesh could well be offset by bright sunshine in West Asia.

So, what is the benefit to India?

First, a significant reduction in logistics cost along certain nodes in this route. Second, a further blossoming of trade with countries hitherto relatively unexploited, such as Saudi Arabia, the Gulf, and East Europe, and possibly with other countries that branch off from the main route. Third, the potential to be the chosen builder and operator of the rail portion may enhance India’s stature. Fourth, it signals India’s shift from the earlier India-Iran-Russia INSTC (International North South Transport Corridor) that had Iran’s Chabahar Port as a pivot. Fifth, it is seen as cementing relations between India and Arab nations.

Are there any softer issues to watch out for?

Yes, and they are largely to do with easing bureaucratic impediments along the route. A container from Mumbai to Hamburg will have to be loaded and unloaded at six stations. That is a high degree of handling for any version of multi-modalism. Then, there are the usual border checks for illegal movements across 15 participating nations within the IMEEC. So, it is of critical importance to have a “single-pass” mechanism for total system effectiveness.

Was not this the Spice Route centuries ago?

Yes. As distinct from the Silk Route (overland through Central Asia), this alignment is indeed almost equivalent to the Spice Route of centuries ago, when imperial Rome bought spices and jewellery from the splendour that was India.

How will it be funded?

As things stand, IMEEC is a combination of operating ports and a new rail line across the Arabian peninsula. It is only this rail link that has to be built. The distance between Dubai and Haifa Port is about 2,600 kms. Assuming it would cost ₹30 crore/km to build a high-quality line, the total would be ₹78,000 crore. Given that Japan alone was able to provide ₹1 trillion of concessional finance for India’s Bullet Train project, this amount is easily fundable by the well-heeled partners. In its final form, the IMEEC is expected to require a capital outlay of around $20 billion with port-capacity expansions, new freight stations, optical fibre networks, electricity grids and pipelines.

So, is the IMEEC a geopolitical move?

Certainly so. It seeks to send a powerful message that a swathe of well-meaning and friendly countries have joined hands to impact transport, trade and economic development in a model quite different from a dominant single-country initiative. Italy, for instance, has decided to pull out of BRI. Moreover, it is seen as a diplomatic victory for India in many ways, as the IMEEC bypasses both Pakistan and Turkey. Specifically, it opens up a viable access unavailable hitherto with the blocked land route through Pakistan.

Thus, from trade to diplomacy, there is much to commend in this initiative.

The writer is an infrastructure expert. He is also the founder and managing trustee of The Infravision Foundation