Recently, a deal was signed between Russia and Iran to construct the Iranian railway line, the Rasht-Astara railway, as part of the International North–South Transport Corridor (INSTC). The corridor aims to create a substantial connection between India, Iran, Russia, Azerbaijan, and other nations via railways and sea. This new potential global trade route is poised to hold its own against competition from the Suez Canal.
The Rasht-Astara Railway
The Rasht-Astara railway is a 162-kilometer rail line that will connect the city of Rasht in Iran, situated near the Caspian Sea, with Astara in Azerbaijan on the border with Azerbaijan. The introduction of this connection will reduce travel time by four days. As an integral component of the North-South transport artery, it will significantly diversify worldwide traffic flows. This railway along the Caspian Sea coast aims to link Russian ports on the Baltic Sea with Iranian ports in the Indian Ocean and the Gulf.
Overview of the International North–South Transport Corridor
The INSTC is a 7,200 km Multi-Mode Transit System that integrates ship, rail, and road routes, facilitating cargo movement between India, Iran, Azerbaijan, Russia, Central Asia, and Europe. Launched on 12th September 2000 in St. Petersburg by Iran, Russia, and India, the INSTC membership has since grown to include 10 more countries, including Azerbaijan, Armenia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkey, Ukraine, Syria, Belarus, and Oman, with Estonia and Latvia expressing their interest in joining.
Routes and Modes of the INSTC
The INSTC consists of three main corridors. The Central Corridor starts from the Jawaharlal Nehru Port in Mumbai and connects to the Bandar Abbas port (Iran) on the Strait of Hormuz. The Western Corridor connects the railway network of Azerbaijan to that of Iran via cross-border nodal points of Astara (Azerbaijan) and Astara (Iran) and extends to Jawaharlal Nehru port in India via sea route. Lastly, the Eastern Corridor connects Russia to India through the Central Asian countries of Kazakhstan, Uzbekistan, and Turkmenistan.
Significance of INSTC for India
The INSTC serves as an alternative route for India to connect with resource-rich Central Asia, while evading potential hindrances via Pakistan. This is particularly important given China and Pakistan’s reinforcement of their economic and trade ties through the China Pakistan Economic Corridor (CPEC) and the Gwadar port under the Belt and Road Initiative (BRI).
Through reduced time and freight costs, the INSTC aims to decrease the transit times by an estimated 40% and freight expenses by a projected 30% compared to the traditional Suez Canal route. With the Chabahar Port investment, India has not only created a gateway for trade opportunities with Iran and Afghanistan but has also strategically positioned itself in Iran’s energy-rich Sistan-Balochistan region, which grants direct sea access.
Challenges and Potential Solutions
While INSTC holds great promise for various nations, achieving its full benefits will require strategic planning, cooperation, and increased funding. The primary challenges for INSTC are linked to the lack of financial support from major international financial institutions due to imposed sanctions on Iran causing global companies to withdraw from infrastructure projects.
Private sector involvement remains limited due to regional security threats and political instabilities. To alleviate these issues, it’s necessary to harmonize tariffs and customs for the corridor’s success, boost informational connectivity for increased trade volume, and address the demand deficit for goods exported from South Asia and Southeast Asia to Europe.
In addition, developing industrial parks and special economic zones focused on mutual interest sectors can promote economic integration among member countries and increase the commercial value of the connectivity corridor. Therefore, despite the challenges, the INSTC remains a transformative development in the region that facilitates not only transit but also humanitarian assistance and overall economic growth.