India, Russia and Iran are to hold a trilateral meeting on developing the International North-South Transport Corridor (INSTC) on November 23, according to Indian media outlets.
Those envisioning the 7,200-kilometre, multimodal INSTC see India connected to northern Europe via a corridor running through Iran, Azerbaijan and Russia with direct sea routes from western India to Iran’s only oceanic port, Chabahar on the Sea of Oman, crucial to the project’s success. Rail routes running from Iran and through Azerbaijan to Moscow would also be fundamental to the INSTC.
Word of the upcoming meeting emerged after Union Minister of Commerce and Industry for India Suresh Prabhu met with Russian businessmen in New Delhi last week.
"All issues may be resolved in order to operationalise the route as early as possible," Prabhu reportedly said.
Prabhu noted the INSTC would also enhance trade transport connectivity with Central Asian markets.
"INSTC is the shortest multimodal transportation route linking the Indian Ocean and Persian Gulf via Iran to Russia and northern Europe," he was also cited as saying, adding: "The estimated capacity of the corridor is 20 to 30mn tonnes of goods per year and it will reduce time and costs by 30% to 40%."
The plan for the initial stage of the project is for 5mn tonnes of goods per year to be moved along the corridor
Eastern and Central European countries, meanwhile, are looking for ways to connect to the Eurasian INSTC. Belarus has made some rail moves and in May Poland sent an Iran-bound cargo train through Ukraine, Georgia and Azerbaijan on a test run.
It crossed 2,356 kilometres, including 399km in Poland, 965km in Ukraine, 396km in Georgia and 596km in Azerbaijan, before arriving in Tehran.
In September 2017, Iran announced it was pushing ahead with plans to reduce tariffs on export cargo in transit as part of its commitment to the wider project.
Major INSTC junctions would include Chabahar, Tehran, Bandar Abbas, Bandar Anzali, Baku, Astrakhan and Moscow. Road trucking also features in the concept.
Iran’s Chabahar, designated a free trade zone, is seen as India’s direct response to China and Pakistan’s joint investment in the Pakistani Arabian Sea port of Gwadar, located just 80km from the Iranian port. Gwadar is a key element of the corridor linking Pakistan, Afghanistan and China under the huge multi-continent One Belt One Road (OBOR) project.
Iran is very keen on developing Chabahar with India—partly because it would ease the burden on the seaport of Bandar-a Abbas, located at the entrance to the Strait of Hormuz, and also partly to boost its own greatly under-developed trade with Afghanistan—but the Indians may get little joy if they push Tehran to take sides in New Delhi’s great geopolitical game with Beijing and Islamabad. Iran cannot afford to pour cold water on Chinese FDI potential. OBOR even envisages Iran as a key trade node that could trans-ship goods from China to destinations in the Middle East and North Africa.
It also won’t be lost on India that in June this year the Iranians and Pakistanis announced that they were looking to sign a free trade agreement. Iran, it seems, is prepared to take on the tall order of keeping everybody happy at the same time.
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