The INSTC, a
7,200 km (4,500 miles) multimodal route, connects St. Petersburg to Mumbai,
traversing Iran and utilizing a network of railways, roadways, and seaports.
This development marks a significant shift in Russia’s trade strategy amid
Western sanctions, redirecting its trade flows from Europe to Asia and the
Middle East.
The INSTC’s development, especially through Iran’s Chabahar Port, is
poised to revolutionize India’s trade landscape. As Russia faces sea trade restrictions due to the Ukraine conflict,
this corridor gains strategic and economic importance, presenting an
alternative to China’s Belt and Road Initiative.
India recently took over the management of Chabahar
Port for an initial 10-year period, enhancing the INSTC’s potential. This port
is set to transform regional connectivity, enabling efficient trade with
Central Asia, Afghanistan, and Russia, and offering an alternative route to
Europe.
. The corridor is also seen as a viable alternative to the Suez Canal
route, which handles a significant portion of global trade but remains
vulnerable to disruptions, as evidenced by the 2021 blockage and recent
conflicts affecting the canal.
Ajay Srivastava, Co-founder of the Global Trade
Research Initiative (GTRI), emphasizes the strategic advantage of the INSTC for
Indian ports like Kandla, JNPT, Mumbai, Mormugao, Cochin, and Mangalore. These ports can leverage Chabahar to
access Central Asia and Northern Europe via Iran and Russia, reducing transit
times from 45 to 25 days and cutting freight costs by 30%.
Nisha Taneja of the Indian Council for Research on
International Economic Relations (ICRIER) notes that sectors such as energy,
pharmaceuticals, IT, health, agriculture, textiles, and gems and jewelry stand
to benefit significantly from this route.
India’s coal imports from Russia, especially for steel production and
power generation, have surged due to lower prices amid the Ukraine conflict. Metallurgical coal imports from Russia have tripled to 15.1 million tonnes
in 2023-24. Russia’s share in India’s metallurgical coal imports has risen to
21%, driven by cost advantages. However, analysts caution that these imports
may decline if Russia imposes an export tax on metallurgical coal and logistics
costs increase. Additionally, the INSTC could facilitate energy imports from
Central Asia, enhancing India’s energy security through cheaper and more
reliable sources.
Rajan Sudesh Ratna of the United Nations Economic and Social Commission
for Asia and the Pacific (UNSCAP) highlights the economic sense of the INSTC in
terms of energy connectivity. Central Asia
offers a viable alternative for energy imports due to lower prices and improved
connectivity, potentially saving India significant foreign exchange and
reducing production costs.
The INSTC, thus, emerges as a crucial geostrategic tool for India,
promising to enhance its trade reach and economic resilience in the face of
global uncertainties.