India-Iran-Russia corridor on fast-track after INSTC draft pact

Moving closer to reality, the much awaited International North-South Transport Corridor (INSTC) linking India, Iran and Central Asia through the ship-rail-road route has finally progressed with India, Iran, Russia and ten other countries meeting in New Delhi and approving a draft transit and customs agreements. The corridor could be a game-changer for India as it will provide a route to transport goods at lower costs to markets in Russia, Central Asia and Europe bypassing Pakistan. The project was given an added impetus after Prime Minister Narendra Modi visited the five Central Asian countries a couple of months ago.

Nearly 15 years after the idea was first conceived between India, Iran and Russia in September 2000 to have a multi-modal transportation corridor that would link the Indian Ocean to the Persian Gulf with Caspian Sea through Iran and move towards Northern Europe via Russia, the project has now moved to the next stage. While there were many factors behind why the idea languished for so many years, the sanctions imposed on Iran by the West remained a key hindrance. However, with Iran’s breakthrough in reaching an agreement with the P5+1 members to curb its nuclear programme, the sanctions are expected to be lifted by early 2016, paving way for Iran’s participation in international trade again.

During the INSTC meeting between the members, a number of steps on issues related to logistics and infrastructure necessary or making the proposed transport corridor operational were discussed. With the draft agreement in place to make the corridor operational, India has moved in the right direction by bolstering the project after Tehran’s deal with the West.

The INSTC corridor would not only make it beneficial for India in terms of cheap costs, but also make it strategically important for India with easier access to Central Asia and Iran without having to depend on the Suez Canal route to transport goods to Eurasia and Europe. The corridor also fits into India’s long-term approach to strengthen its ties with Central Asian countries and tap into energy resources of the region to meet its growing domestic energy needs.

The importance given by India to the project could be seen with its commitment to hold the Delhi meeting back- to- back with a meeting of all the stakeholders in Mumbai in June. One could expect India’s connectivity to improve with Central Asia mainly over the next few years once the INSTC becomes operational.

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