Relevance: GS-2: Bilateral, Regional, and Global Groupings and Agreements involving India and/or affecting India’s interests.

Key Phrases: International North-South Transport Corridor (INSTC), Central Asia, Euro-Asian Conference on Transport in 2000, Suez Canal,Chabahar-Zahedan railway line, India Ports Global Limited, Chabahar port, Belt and Road Initiative (BRI), Quad Summit,Non-alignment to multi-alignment.

Why in News?

• Recently, RailFreight dot Com reported that two 40-ft containers of wood laminate sheets crossed the Caspian Sea from Russia’s Astrakhan port, entered Iran’s Anzali port, and continued their southward journey towards the Arabian Sea, entered the waters at Bandar Abbas and eventually reach Nhava Shiva port in Mumbai.
• The journey signalled the launch of the International North-South Transport Corridor (INSTC), which is expected to consolidate the emerging Eurasian Free Trade Area.

Need for INSTC:

• Cheaper and faster route:
  • Once fully operational, the INSTC is expected to reduce freight costs by 30% and the journey time by 40% in comparison with the conventional deep-sea route via the Suez Canal.
• Alternative route:
  • INSTC, in the longer run, would be an alternative to the Suez Canal and the Mediterranean dominated by some powers, and the Bosporus Strait.
  • The need for an alternative route was deeply felt last year, when the Ever-Given container ship was stuck in the Suez, halting maritime traffic between the Mediterranean Sea and the Red Sea.
• Increased trade volume:
  • The trade statistics among the member nations of INSTC reveal a dismal picture so far.
  • With improved physical connectivity INSTC will not only enhance trade volume but will also improve knowledge and information-sharing mechanisms.
• Creation of backward and forward linkages:
  • The member nations along the INSTC will get the opportunity to transform themselves into specialised transit and manufacturing hubs through infrastructural development.
  • This will also stimulate local industry, manufacturing, and trade along the way, thus transforming this transport corridor into a developmental corridor.
  • It will also help in creating further employment and growth opportunities, leading to betterment in the overall economy of the bloc.

Benefits of INSTC for India:

• Once completed, this infrastructure will allow India access to Afghanistan and Central Asia, a prospect strengthened by the Taliban government’s support for the project. India can now bypass Pakistan to access Afghanistan, Central Asia, and beyond.
• The INSTC can shape a north-south transport corridor that can complement the east-west axis of the China-led Belt and Road Initiative (BRI).
• The corridor will improve India’s economic engagement with Gulf countries like Iran and Iraq.
• Cheaper cost of transport will lead to increased competitiveness of Indian exports, opening access to unfulfilled markets.
• The creation of diverse supply chains across Eurasia might surely alter the stereotype of the East as the producer and the West as the consumer.
• With India being the fifth largest energy consumer in the world, consuming 4.4 percent of the world’s total, improved connectivity and trade prospects with the energy-rich member nations cannot be overlooked. Also, another prospect of an oil pipeline development along INSTC cannot be ruled out.

India’s investment in INSTC:

• India’s investment in the INSTC is exemplified by its involvement in Iran’s Chabahar port and the construction of a 500-km Chabahar-Zahedan railway line.
• The India Ports Global Limited, a joint venture between the Jawaharlal Nehru Port Trust and Kandla Port Trust, will develop the port along with Iran’s Aria Banader.
• IRCON International will contribute to constructing the railway line.
• A Special Economic Zone around Chabahar will offer Indian companies the opportunity to set up a range of industries; for example, NALCO proposes to set up an Aluminium smelter plant.
• Lines of Credit will be extended to Iran by Exim Bank.

Non-alignment to multi-alignment:

• India’s founding role in both the INSTC and the Quad exemplifies its departure from non-alignment to multi-alignment.
• The INSTC offers a platform for India to closely collaborate with Russia, Iran, and Central Asian republics.
• That two of its partners are subject to Western sanctions hasn’t prevented India from collaborating with the U.S., Japan, and Australia as part of the Quad to create and safeguard a free and open Indo-Pacific.
• Indian policymaking in international affairs has often been criticised for its moral indecisiveness, diplomatic reticence, and ideological confusion. These critics have failed to observe the subtle shifts in Indian foreign policy from non-alignment to multi-alignment.

Conclusion:

• Although the INSTC, if realised in full, can open massive opportunities for all the stakeholders, the actualisation of all its potential advantages will require a lot more in terms of finance, cooperation, political will, as well as strategic planning.
• As a transcontinental multi-modal corridor that aims to bring Eurasia closer together, the INSTC is a laudable initiative in its own right. That it helps India consolidate its multi-alignment strategy sweetens the deal.

Source: The Hindu

Mains Question:

Q. International North-South Transport Corridor (INSTC) may turn out to be a game changer. Discuss. (250 words).