Authors: Aaron Nair and Dr. Karamala Areesh Kumar
Under the Modi regime, India’s foreign policy has seen considerable changes in geopolitical strategies, economic development, and power shifts in the global arena. India has made several efforts to create confidence with countries in geo-strategic regions that are beneficial in trade and polity for India’s rise and to counter the vested interests of non-friendly countries through the formation of dialogue and strengthening relationships. Part of that effort is the building of an economic corridor between the two countries mainly to connect regions through transportation while improving infrastructure through the route. This involves the attraction of investment and an attempt to generate economic activities within an able transportation system while being beneficial for earning revenue in the prospective region that has been underutilized despite having greater potential.
There has been a consistent rise in the number of international economic corridors between India and other countries. The India-Middle East-European Economic Corridor happens to be the most recently announced corridor based on countering a situation in global affairs that is riddled at present with wars and conflicts. The IMEC was approved during the G20 meeting in New Delhi with a proposal of two corridors connecting India to the Arabian Gulf, known as the East Corridor and another one which connects the Gulf to Europe, known as the North Corridor. The major geo-political advantage of the corridor lies in impeding the progress of China’s BRI and connecting the West by breaking Pakistan’s influence over India’s overland connectivity. This route is planned in a manner that makes the trade between India and Europe 40 times faster than the previously used Suez Canal route.
Similarly, during Modi’s recent visit to Russia, a joint Indo-Russia venture was proposed in the shape of the Chennai-Vladivostok corridor that will link the east coast of India to the far east regions of Russia to ease operations. This will cut down the time needed to transport goods from 40 days to 24 days. The Mumbai-St. Petersburg route through the Suez Canal, which is approximately 16,066 kilometres will be substituted with the Chennai Port-Vladivostok route via Eastern Maritime Corridor, which is only 10,458 kilometres. Modi has asserted the need to strengthen the contact between the two countries by discovering each other’s civilization through the Ganga-Volga dialogue, thus, writing down the need for more people-to-people contact for the partnership to flourish.
Previously in the 2000s, there was another attempt made by India, Russia and Iran to create better connectivity with Central Asia and other parts of Europe by promoting trade through a multi-modal transportation network. The International North-South Corridor was formed in September 2000 with greater emphasis on the development of the Eurasian region. Multi-modal transportation system involves connectivity through air, sea, rail and road routes, largely focused on linking the Indian Ocean and the Persian Gulf to the Caspian Sea via Iran and towards Northern Europe through the St. Petersburg route. The corridor is considered significant for India’s Connect Central Asia policy, as pronounced in 2012 and efforts are made by the Government to increase membership. Recently, Prime Minister Modi formally invited Turkmenistan to join the group to better road connectivity. This corridor holds further political size for India as this can again be used to thwart China’s BRI initiative and cement its interest in Central Asia and further. The INSTC can be a very lucrative possibility used by many other countries, with its potential capable of even enticing India’s Southeast Asian neighbours. The 2021 blockage of the Suez Canal has led to the Iranian Government renewing its commitment, while the Ukraine war has made Russia refocus its attention on the corridor.
The Ashgabat Agreement involved a collaboration between Iran, Turkmenistan, Oman and Uzbekistan again focusing on international transport and the creation of an alternative transit corridor that is stable. India’s accession was formally announced in 2018, after the Modi Government reviewed the agreement in 2016 and showed an interest in joining the agreement, citing better connectivity to the geo-strategic regions of Central Asia. India’s role will involve monitoring and providing information on taxes, tariffs, fees and other proceeds to be paid at checkpoints and ports. Another major advantage would be the linking of Chabahar Port in Iran, which was financed by India to the agreement, thus making it the shortest land route to Central Asia. India’s plan to build a north-south railway of about 610 kilometres between Chabahar to Zahedan would not have been possible without the agreement, making it a strategically vital corridor. India also looks to downplay Pakistan’s influence among immediate neighbours like Afghanistan by using the Chabahar Port through which shipments of wheat have already been sent. The Afghan trade is estimated to be $ 5 billion if it links with the agreement, thus drastically reducing their dependency on Pakistan for trade. This agreement is further poised to help India increase their trade with Central Asia, which at present is estimated at over $ 1 billion and is not seeing sufficient growth.
The Modi Government has also used the northeastern parts of the country as a global gateway in terms of gaining more traction in South Asian countries with a motive to improve trade relations. In 1997, a South Asian quadrangle was formed between Bangladesh, Bhutan, India and Nepal, which later came to be known as the BBIN initiative to improve transport of goods, people-to-people interactions and concentrate on areas of collaboration such as tourism, investment and regional development. In recent times the Government has tried to revive this initiative by taking into consideration that the South Asian region is the least integrated amid calls for better co-operation and to not be left behind in a world order that is trying to move on after a crisis like coronavirus 19. According to the World Bank’s Connecting to Thrive report, India and other countries of South Asia find it easier to trade with Brazil and Germany compared to their immediate neighbours as it is 15-20 percent cheaper. Yet, the unexploited possibilities of a better trade relationship within the untapped markets are large, standing at 93 percent for Bangladesh, 50 percent for India and 76 percent for Nepal, which is even after trade between the countries grew six-fold during 2005-2019. The Government is looking forward to addressing various issues by cutting red tape and improvising in the fields of digitalization and automation targeted at stalling delays for procedures. This is done keeping in mind the United Nations Global Survey on Trade Facilitations and Paperless Trade findings, which says that digitization can cut up to 40 percent of trade costs. While the Governments on either side focus on overcoming various challenges, what is obvious from the initiative is the importance of regional focus in terms of trade and a guarantee for more cooperation in fields of mutual interest.
The Asian Development Bank will be bankrolling the initiative that is India’s first coastal corridor, connecting coastal regions of India and opening investment opportunities for domestic companies to benefit from in South Asia and Southeast Asia. The development of the East Coast Economic Corridor is important from the viewpoint of the Act East policy as well as to improve economic integration along with other initiative such as the BIMSTEC (Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) and BBIN. The ECEC initiative focuses wholly on India’s underdeveloped coastal regions with rich natural resources as an effort to improve conditions in the area along with bringing in better trade dealings. The development is slated to start along with the Chennai-Vizag Industrial Corridor, another important initiative which ranges to about 800 kilometres while connecting various other cluster ports. The ECEC aims at regional integration among countries like Bangladesh, Sri Lanka, Bhutan, Maldives and Nepal. It is predicted to improve intra-regional trade, which is only 6 percent, while East Asia and Southeast Asia have averages of 37 percent and 24 percent, respectively.
At the helm of the trade corridor is the importance of easing transportation and cutting costs to create a more reliable and strategically vital relationship between countries. India through trade corridors has seen an attempt to connect to most parts of the world, be it immediate neighbours in South Asia and Southeast Asia to Central Asia and Eastern Europe, while also focusing on building ties with the West and the Middle East. The Modi Government must however be careful about not allowing the over-capitalization of economic corridors such that it creates a free flow of resources that might remain unchecked and thus, impractical for India’s interest.
