International North South Transport Corridor (INSTC)

Syllabus: General Studies Paper 2

Recently, two 40-ft containers of wood laminate sheets from Russia’s Astrakhan port crossed the Caspian Sea and eventually reach Nhava Shiva port in Mumbai. The journey signalled the launch of the International North South Transport Corridor (INSTC).

• It is a 7,200-km multi-modal transport corridor that combines road, rail and maritime routes connecting Russia and India via Central Asia and Iran. The corridor is expected to consolidate the emerging Eurasian Free Trade Area.
• The legal framework for the INSTC is provided by a trilateral agreement signed by India, Iran and Russia at the Euro-Asian Conference on Transport in 2000.

The International North-South Transport Corridor(INSTC):

• INSTC was first proposed in 2000 to improve connectivity between Russia, Central Asian states, and India.
• It is a 7,200-km-long multi-modal connectivity project to establish transport networks (ship, rail, and road route). It will be used for moving freight between India, Russia, Iran, Europe, and Central Asia. It will cut costs and time in moving cargo.
• Members: It includes 13 countries namely India, Iran, Russia, Turkey, Armenia, Azerbaijan, Belarus, Kazakhstan, the Kyrgyz Republic, Tajikistan, Oman, Syria, and Ukraine.
• Dry runs of two routes were conducted in 2014 to identify and address key bottlenecks. The two routes were:
• The first was Mumbai to Baku via Bandar Abbas and
• The second was Mumbai to Astrakhan via Bandar Abbas, Tehran, and Bandar Anzali.
• However, the project has been slow to take off. Despite a renewed focus on INSTC by India and Russia, work was again hit by the Covid-19 pandemic.
• 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.
• 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.
• A special economic zone around Chabahar will offer Indian companies the opportunity to set up a range of industries.
• Lines of credit will be extended to Iran by Exim Bank.

Significance of INSTC:

• Increase in Bilateral Trade: It has been predicted that improved transport connectivity will increase bilateral trade volumes between Russia, Central Asia, Iran, and India.
• Shorter and Cheaper Route: As per the study by the Federation of Freight Forwarders’ Associations in India, INSTC route is 30% cheaper and 40% shorter than the current traditional route.
• INSTC has economic and strategic relevance to India due to China’s ambitious One Belt, One Road Initiative. Hence, the proposed INSTC trade corridor could help India secure its interests in Central Asia and beyond.
• Integration with Ashgabat Agreement: The INSTC can integrate with the Ashgabat agreement.