The International North South Transport Corridor (INSTC) is an ancient trade route that connected South Asia with North Europe for centuries. This route was used by European, Indian, Russian and other foreign traders. Thousands of Indian traders have used this route to reach out to central Asian markets from 15th to early 19th centuries.
The modern day International North South Transport Corridor (INSTC) is a multi-modal trade transport network that includes rail, road, and water transport from Mumbai in India via Bandar Abbas in Iran to Moscow and in St. Petersburg in Russia. It addresses the need for greater economic and energy cooperation between South, Central, West Asian and Northern European region.
The INSTC envisages movement of goods from Mumbai (India) to Bandar Abbas (Iran) by sea, from Bandar Abbas to Bandar-e-Anzali (an Iranian port on the Caspian Sea) by road, and then from Bandar-e-Anzali to Astrakhan (a Caspian port in the Russian Federation) by ship across the Caspian Sea, and thereafter from Astrakhan to other regions of the Russian Federation and further into Europe by Russian railways.
The successful activation of the corridor will help connect India to Russia within 16-21 days at competitive freight rates leading to development of trade on the INSTC.
The INSTC was initiated by Russia, India and Iran in September 2000 to establish transportation networks among the member states and to enhance connectivity with the land locked region of Central Asia. The agreement was ratified by all the three signatory states and has been in force since May 16, 2002.
Later on, the INSTC was expanded to include eleven new members, namely: Republic of Azerbaijan, Republic of Armenia, Republic of Kazakhstan, Kyrgyz Republic, Republic of Tajikistan, Republic of Turkey, Republic of Ukraine, Republic of Belarus, Oman, Syria, Bulgaria.
The Foreign Trade Policy of India, 2015-20, has highlighted the importance of the International North-South Transport Corridor (INSTC) in expanding India’s trade and investment links with Central Asia.
The strategic significance of INSTC for India is immense:
a. The INSTC has particular economic and strategic relevance to India given the increasing regional ambitions of China through its One Belt, One Road Initiative. The proposed INSTC trade corridor could help India secure its interests in Central Asia and beyond.
b. India is expected to negotiate a comprehensive economic partnership agreement with the Eurasian Economic Union, which consists of Belarus, Kazakhstan, Kyrgyzstan and Russia, with Armenia likely to join. This agreement would help India expand its economic, trade and investment opportunities in this region.
c. At present, India has to depend on the routes through China and Europe to reach out to Eurasia, which are long, expensive and time consuming. Therefore, we are in need for a route which would be relatively shorter, cheaper and, more importantly, safer and well secured. It is estimated that the INSTC can reduce time and cost of container delivery by 30-40 per cent.
d. From India’s point of view, this corridor would help India to reach out to Central Asia and Russia, and enable transportation of goods at cheaper cost to the European markets. In addition, Indian exports could potentially get a competitive advantage due to lower cost and less delivery time.
At present, India, with the help of Russia and Azerbaijan, has successfully tested the main routes of the North South International Transport Corridor in order to assess its cost-effectiveness and the possibility of Indian companies using the route for trade with former Soviet republics.
A lot of work still has to be done to revive this ancient trade route in a modern way with multi-modal transport. We are looking forward to participate in this alternative trade route by providing a transport logistics service for the benefit of International and Indian trade to/from central Asia and North Europe.
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