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In June 2021, INSTC’s western corridor was operationalized to connect India with Europe for the first time.
About INSTC
- The INSTC is a 7,200 km-long multimodal transportation network encompassing sea, road, and rail routes to offer the shortest route of connectivity.
- It was established on 12th September 2000 in St. Petersburg, by Iran, Russia and India for the purpose of promoting transportation cooperation among the Member States.
- It links the Indian Ocean to the Caspian Sea via the Persian Gulf onwards into Russia and Northern Europe.
- It is aimed at reducing the carriage cost between India and Russia by about 30 per cent and bringing down the transit time by more than half.
- It will move freight between India, Iran, Afghanistan, Armenia, Azerbaijan, Russia, Central Asia and Europe.
(Image Courtesy: Diplomatist)
Significance
- Increased Connectivity: It also has the potential to transform the economies of countries along the corridor into specialized manufacturing, logistics, and transit hubs by facilitating access to newer markets.
- Cheaper and Faster Alternative: The recent Suez Canal blockade, which cost the global economy hefty damage amounting to US$9 billion, has amplified the optimistic outlook towards the INSTC as a cheaper and faster alternative multimodal transit corridor.
- Plugging Demand Deficit: The flow of goods and services will inevitably improve information sharing mechanisms along the corridor, which can reverse the existing demand deficit in the member nations.
- Humanitarian assistance: It will help in providing better humanitarian assistance on an urgent basis.
Benefits for India
- Export Opportunities: The INSTC connects India with Central Asia, Russia, and has the potential to expand up to the Baltic, Nordic, and Arctic region, increasing the scope of trade multifold.
- Economic Engagement: For India, it provides a shorter trade route with Iran, Russia, and beyond to Europe, creating scope for increased economic engagement.
- Permanent Alternative Route: It opens up a permanent alternative route for India to trade with Afghanistan and Central Asia, given the hurdles in the direct route through Pakistan.
- “Connect Central Asia” Policy: When looked at in sync with the Ashgabat Agreement, the INSTC could be the key to India’s “Connect Central Asia’’ policy.
Way Ahead
- Future Potential: The future creation of industrial parks and SEZs to develop specific sectors, such as pharmaceuticals and agriculture, would add commercial and substantive value to this connectivity corridor.
- Cross border e-commerce: As internet connectivity strengthens across INSTC member countries and the overall corridor region, cross border e-commerce is one key sector that stands to gain the most.
- Transformative Development: This connectivity initiative along with its underlying commercial advantages can bring about a transformative development in the region through economic advancement.
Source: ET
