International North-South Trade Corridor to be operational by Jan 2018

Source: Sputnik

The International North-South Transportation Corridor (INSTC), which will connect Mumbai, the commercial hub of India with Saint Petersburg in Russia is likely to become operational within January 2018, according to a report by The Economic Times.

Once complete, this will represent a game changer for India’s Eurasia policy. This project has seen numerous delays which have led this ambitious project to hang fire for 17 years when it was first conceived. It will kick-start with the departure of the first consignment from India to Russia next month but will only become fully operational after a few months from the date of its formal operationalisation.

What is the INSTC?

INSTC is a 7,200-km-long multi-modal transport corridor between India, Iran, Afghanistan, Armenia, Azerbaijan, Russia, Central Asia and Europe. The corridor will significantly reduce the cost and time of transporting goods from Mumbai to Russia and Europe, increasing trade and commerce and help India increase its exports there.

The project’s objective is to improve trade connectivity between major centres of trade in Russia, India, Iran and other Central Asian nations such as Mumbai, Moscow, Tehran, Baku, Bandar Abbas, Astrakhan and Bandar Anzali, by branching out the main route.

Trade Boost

According to a report by Russian news agency Sputnik , the project will help India and Russia to increase bilateral trade to  USD 30 billion over the next 10 years.

Dry runs were conducted in 2014 on two segments of the route, which showed that the transport costs were reduced by up to USD 2,500 per 15 tons of cargo.

The route involves moving cargo from Mumbai to Chabahar Port in Iran via ship and then to Russia and Eastern Europe via central Asian countries. Currently, cargo is carried on freight ships by sea via the Red Sea, Suez Canal, Mediterranean Sea, the English Channel and then the Baltic Sea and then to St. Petersburg greatly increasing time and cost.

The first phase of the Chabahar Port in Iran, which will play a vital role in the project, was opened a few days back.

Read:  How Chahbahar Port will become the key piece in India’s global strategy.

The INSTC is seen by analysts as India’s attempts to respond to the Chinese Belt and Road Initiative by building an alternative global transport network with Russia and Japan as the likely bookends for such venture by potentially combining INSTC with the Indo-Japan Asia-Africa Growth Corridor project (AAGC). With Japan & Russia also resolving their issues and planning Japan-Russia transport corridor, a synergy of this proposal along with INSTC and AAGC will lead to mutual dependencies and trade and lead to deepening trade and strategic relations between these nations.

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