In early-December 2021, when Prime Minister Modi & Vladimir Putin met in Delhi, there was a passing mention of something called the INSTC (International North–South Transport Corridor).

The INSTC is the shortest, fastest, cheapest and most secure trade route between India and Europe. It passes through just three nations – Russia, Iran, and India – making it a secure, swift and cost-competitive trade route across Europe & west-Asia.

The initial conversation for the INSTC was discussed in early 2021. The Iranians were brought on board during the Iranian foreign minister Dr. Hossein Amir Abdollahian’s first visit to India after he took office in August 2021. The Russia-leg was sealed during Vladimir Putin’s visit to New Delhi in early December 2021.

As a map above shows, the route has five nodes and four segments. Goods departing St. Petersburg travel by rail to a container terminal at Solyanka in Astrakhan, where the Volga River meets the Caspian Sea. From there, the goods are moved by ship to Bandar Anzali, a port in Iran at the southern end of the Caspian Sea. From Bandar Anzali, the goods will move via a rail network to Chabahar port in south-eastern Iran. And finally, from Chabahar, they will go east by ship through the Gulf of Oman, and the Arabian Sea, to Nhava Sheva. However, in this trial run, the goods will be sent by road from Bandar Anzali to the port of Bandar Abbas since the trans-Iran railway is still under construction.

On 11th June, 2022 a test consignment was sent through this route. A trial load of 40 tons of wood panels, was successfully despatched from St. Petersburg on the Baltic Coast in Russia, to Nhava Sheva Container Terminal in Mumbai. The transit is expected to take only 24 days, against the 40 days needed for the Red Sea route. This too, will become faster once the trans-Iranian railway is commissioned next year and the India-operated Iranian port of Chabahar becomes the port of use instead of the port of Bandar Abbas which was used this time around.

The INSTC is a proper competitor to China’s BRI (Belt-and-Road Initiative), since goods can now be sent further east from Nhava Sheva, via landbridge across India to the east coast & then to anywhere in rest of Asia. One added bonus for the INSTC is that the geography of the areas make it less prone to impact of natural disasters.

Of course, the same route will also be operated in reverse for exports from India / Asia to Europe. Especially as India is expanding its highway and railway network and can create a landbride between the east coast & west coasts of India for movement of cargo from Asia to Europe. The INSTC hence presents an attractive option for Europe of crashing both their shipment time and cargo transport costs – for both imports & exports.

It would be very interesting to see how ‘the West’ reacts to this trade route. Will money overcome ideology? At some point of time, when Europe sees a tempting lower-cost, lower-risk way of sending / receiving cargo and when the increased costs of their existing transport routes begin to pinch, will money speak louder than geopolitics?

Further, will ‘the West’ actually go to the extent of blocking a ship exiting an Iranian port for India? Given that you can’t have your Quad and embargo it too. 😜

This space has just opened up… It’s going to be an interesting next few months for sure…

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