Trade corridor flounders on infra bottlenecks

The multi-modal "international North-South trade corridor" between Mumbai and St Petersburg, established in September 2000, is not being utilised to its full capacity due to infrastructure related constraints.

The corridor was expected to cut down on transport time between India and Russia by 10-12 days and reduce freight costs by 15-20 per cent.

In an e-mail interview with Business Standard, Russian minister for economic development and trade Elvira Nabiullina said: "The international North-South transport corridor is not being used to capacity because the necessary infrastructure is not in place yet. The corridor handles about 3 million metric tonsnes of cargo a year. Filling containers on the return run is still a problem."

Nabiullina added that exporters from both the countries were keen on the transport corridor and were keen on using it.

The corridor was established by India, Russia and Iran as a cost-effective alternative for traders by routing cargo via ships, railways and roads. Subsequently, 11 new countries joined the group. The infrastructure bottlenecks include the cargo handling facilities at Astrakhan port in the Caspian sea in Russia.

Nabiullina said Russia mainly exports engineering products, metals and fertilisers to India and imports tea, coffee, tobacco, textiles and some food articles from the country. The largest chunk of Russian imports consist of pharmaceuticals.

"Since India has been changing its focus in international trade, we are studying the possibility of increasing trade in engineering products, notably auto components, jewellery, chemicals, textiles, and foodstuffs. We will also analyse India's trade potential in services, such as IT and business outsourcing, medical tourism, education, transport, construction and engineering and design projects," Nabiullina said.

On February 12, India and Russia will establish a Joint Working Group which will explore avenues to increase trade between both the countries.