Russia Connecting With India Via International North-South Transport Corridor

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While all eyes have been on China concerning Silk Road developments and the so-called “One Belt, One Road” initiative, other countries have also quietly been engaging in massive infrastructure projects that essentially accomplish the same aims – interconnecting Eurasia. As I have pointed out before, China’s promotion of their OBOR plans are limited to projects in which they are involved with  – meaning other, equally impressive plans are not given the same amount of media attention.

One of these ‘quiet’ projects is the plan to link India and Russia via the International North-South Transportation Corridor (INSTC). This project has two components parts for India, one heading north, to Russia and to allow it to access Russia’s vast mineral and timber resources, and the other heading West, through to Iran and both accomplishing similar energy goals while also paving the way ahead for a route into Europe. Iran has just held Presidential elections with the moderate, incumbent president Hassan Rouhani, already known for progressing better relations with the West, being re-elected last week. Another, little reported fact is that India has just agreed to join the international TIR customs convention, which makes the trans-national containerized shipping of goods far more effective and efficient for goods both departing and arriving in India from another TIR nation.

The INSTC is a 7,200km road, rail and sea route that connects India with Iran and Russia for the purpose of promoting transportation cooperation among the Member States. This corridor connects the Indian Ocean and Persian Gulf to the Caspian Sea via Iran, and is then connected to St. Petersburg and North Europe via Russia. The grouping was formally expanded to include ten other countries, being Azerbaijan and Armenia in the Caucasus, then north and west to Turkey, Belarus, Syria and Bulgaria, Oman in the middle east, as well as north and east to Kazakhstan, Kyrgyzstan, and Tajikistan. Studies, carried out by the Indian Federation of Freight Forwarders, have shown cost savings of 30% with a 40% less delivery time by using the INSTC route to Russia rather than the standard routing (see map).

RELATED: Iran Looks To Create Persian Gulf – Black Sea Trade Corridor

Trials have already commenced. Russia’s JSC RZD Logistics, Iran Railways, Azerbaijan Railways and ADY Express Logistics were sent from Mumbai through to Bandar Abbas Port in Iran, loaded onto rail, then sent through to Azerbaijan and onto Kaluga, in Western Russia near the border with Poland. The entire journey took 40 days including 23 days in transit. This times are further expected to be improved once the Indian invested, Iranian Port of Chabahar is fully operational.

These routes will significantly enhance Russian-Indian bilateral trade, and fits in with the joint development plans for each country to continue to promote this new corridor. The two countries have already established financial investment ties with the establishment of a bilateral investment fund invested in by the National Infrastructure Investment Fund (NIIF) of India and the Russian Direct Investment Fund (RDIF), targeted at facilitating high-technology investments in both the countries. Logistics and related transportation businesses in both countries should be looking at establishing operations in either Russia or India to take advantage of this new trade corridor. Please contact asia@dezshira.com us for options.

 

Russia Briefing is published by Asia Briefing, a subsidiary of Dezan Shira & Associates. We produce material for foreign investors throughout Eurasia, including ASEAN, China, India, Indonesia, the Silk Road & Vietnam. For editorial matters please contact us here and for a complimentary subscription to our products, please click here.

Dezan Shira & Associates provide business intelligence, due diligence, legal, tax and advisory services throughout the Eurasian region. We maintain offices in Moscow and St.Petersburg through our Russian partner firm, as well as our own offices in China, South-East Asia and India. For assistance with Russian issues or investments into Russia and Asia, please contact us at russia@dezshira.com or visit us at www.dezshira.com

 

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