Words By: Pranav Doshi
The term ‘Great Game’ harkens to the 19th century when the British and Russian Empires competed for supremacy and influence in Central Asia. Today, a new version of the ‘Great Game’ unfolds in a more peaceful and interconnected world focused on economic prowess and regional connectivity. India, Iran, and Russia find themselves at the forefront of this strategic game, all aiming to jointly secure their positions as vital hubs for trade and commerce. This alliance revolves around developing transit corridors that promise to reshape trade dynamics and boost regional connectivity.
Historical Ties and Strategic Interests
India and Iran’s relationship dates back centuries, marked by cultural exchanges, trade, and historical connections along the ancient Silk Road. In recent decades, both countries have sought to rekindle these ties and explore mutual opportunities for growth and cooperation. For India, Iran provides a crucial gateway to Central Asia, Europe, and the Middle East, while Iran sees India as a reliable and economically vibrant economic partner.
Chabahar Port: The Gateway to Central Asia
At the heart of the India and Iran transit corridors lies the Chabahar Port, situated on the southeastern coast of Iran along the Gulf of Oman. This port has emerged as a game-changer in the region, providing India with a strategic alternative to access the landlocked markets of Central Asia and Afghanistan, circumventing the land route through Pakistan.
India has invested significantly in the development of Chabahar Port, aiming to transform it into a full-fledged transit and trade hub. The port’s deep-water facilities can accommodate large cargo ships, boosting India’s capacity to handle imports and exports more efficiently. Furthermore, establishing road and rail links from Chabahar to Afghanistan’s major cities, such as Herat and Kabul, promises to revolutionize regional connectivity.
Moreover, the Chabahar Port is also set to become an essential part of the International North-South Transport Corridor (INSTC), connecting India with Russia and Central Asia through Iran. This multi-modal transportation network will further boost regional trade and foster economic ties between participating countries.
The India-Iran-Armenia-Russia Trade Route – bypassing the Suez Canal
The India-Iran-Armenia-Russia trade route, also known as the North-South Transport Corridor (NSTC), is a strategically significant trade network connecting India with Europe through Iran, Armenia, and Russia. This corridor offers immense potential to enhance economic cooperation, foster regional integration, and streamline trade across continents.
The idea of the North-South Transport Corridor dates to the early 2000s when discussions between India, Iran, and Russia centred around establishing a more efficient trade route. The primary aim was to bypass the traditional sea route through the Suez Canal and reduce the time and cost of transporting goods between India and Europe. The inclusion of Armenia in the corridor came later, further bolstering its significance.
Bypassing the Suez Canal: Ensuring Global Trade Resilience through alternative routes
The Suez Canal, a vital maritime artery connecting the Mediterranean Sea to the Red Sea, has been a linchpin of global trade for over a century. However, recent events have exposed the vulnerabilities and risks of relying solely on this narrow passage.
The grounding of the Ever Given container ship in March 2021, which led to a six-day blockage, highlighted the urgent need for diversification and alternative routes to bypass the Suez Canal. By creating alternative ways, the impact of such incidents can be minimized, ensuring a more reliable and efficient flow of goods between regions.
Diversifying trade routes helps nations reduce dependence on specific countries or regions for transit. This promotes geopolitical independence and mitigates the risk of any single nation using the canal as leverage during political tension. Also, new trade routes can lead to economic development in the regions they pass through. Investment in infrastructure, such as ports and transportation networks, can create jobs and stimulate economic growth in previously isolated areas. Developing alternative routes helps balance trade flows and ensures a more equitable distribution of monetary benefits. As global trade volume continues to increase, diversifying trade routes becomes crucial to future-proofing international commerce. Having redundant and resilient pathways ensures that disruptions in one region do not paralyze the entire global supply chain.
While bypassing the Suez Canal presents challenges, such as cost, technical feasibility, and geopolitical considerations, exploring and investing in alternative trade routes is necessary to secure global trade stability and resilience. As nations continue collaborating and investing in new infrastructure, they will pave the way for a more robust and adaptable global trade network that can weather unforeseen challenges and support economic growth for years.
The Role of the UAE in India-Russia Trade
The UAE has become a vital transit point for India-Russia trade, acting as a connecting hub between the two countries. This geographical advantage has allowed both India and Russia to tap into the UAE’s well-established infrastructure, modern ports, and logistical expertise. The UAE has also served as a central re-export hub for goods flowing between India and Russia, its central location making it an ideal transit point. Through the UAE, both nations have expanded their trade networks, optimizing the flow of goods and capital across the continents.
Maritime trade routes are pivotal in facilitating commerce between India and Russia. Major Indian ports like Mumbai, Chennai, and Kolkata are crucial departure points for various goods destined for Russia. These shipments traverse the Arabian Sea and the Persian Gulf before reaching the UAE’s world-class ports, such as Jebel Ali in Dubai and Khalifa Port in Abu Dhabi.
The UAE’s strategic location ensures the efficient transshipment of goods between Indian and Russian vessels, reducing transit times and costs. Additionally, UAE ports’ advanced facilities and streamlined customs processes have expedited trade operations, making it an attractive route for both countries.
The UAE’s modern road infrastructure and interconnections with other Gulf Cooperation Council (GCC) countries enable seamless trade between India and Russia via land routes. The construction of the Etihad Rail project, a network connecting the UAE’s critical ports to its borders with Saudi Arabia and Oman, promises to enhance logistical efficiency even further.
Challenges and Obstacles
While the India-Iran-Armenia-Russia trade route holds tremendous potential, several challenges need to be addressed to ensure its smooth functioning and realization of the intended benefits:
1. Geopolitical Factors: The NSTC passes through regions with complex geopolitical dynamics, including the Caspian Sea and the South Caucasus. Political tensions between countries along the route can disrupt trade flows and necessitate diplomatic solutions.
2. Infrastructural Development: Although significant strides have been made, some sections of the corridor require further infrastructure development to efficiently accommodate the increased trade volume.
3. Trade Barriers: Tariff and non-tariff barriers in different countries can hinder the seamless movement of goods. Harmonizing trade regulations and policies is necessary to maximize the corridor’s potential.
4. Security Concerns: Ensuring the safety and security of goods and transportation along the route is vital to building confidence among traders and investors.
Energy Security and Beyond
In addition to trade, India’s engagement with Iran is fuelled by its quest for energy security. Iran possesses vast oil and gas reserves, and India, one of the world’s fastest-growing economies, has an insatiable appetite for energy resources. Therefore, strengthening ties with Iran ensures a stable energy supply for India’s burgeoning industries and population.
Furthermore, the transit corridors are also vital for India’s connectivity with the broader Middle East and Africa. Enhanced regional connectivity opens avenues for increased investments, joint ventures, and people-to-people contacts, fostering a more comprehensive relationship between India and the Middle Eastern nations.
Geostrategic Implications
While the India and Iran transit corridors hold immense economic promise, they also carry substantial geostrategic implications for the region and beyond. As these corridors gain prominence, they challenge the traditional dominance of Pakistan’s Gwadar Port, developed with Chinese investment as part of the China-Pakistan Economic Corridor (CPEC).
The competition between Chabahar and Gwadar reflects the broader dynamics of regional power play, with India and China jostling for influence in the Indian Ocean region. India’s investment in Chabahar Port has the potential to counterbalance China’s growing presence in Gwadar and its Belt and Road Initiative (BRI) projects in the region.
The India and Iran transit corridors significantly stride towards regional connectivity, economic cooperation, and strategic influence. By developing the Chabahar Port and investing in the International North-South Transport Corridor, India aims to enhance its connectivity with Central Asia, Russia, and beyond while reducing its dependence on Pakistan for trade access.
The India-Iran-Armenia-Russia trade route, or the North-South Transport Corridor, offers a promising pathway for enhanced economic cooperation and regional integration. This trade corridor significantly benefits India, Iran, Armenia, and Russia by shortening transit times and reducing transportation costs. Moreover, it can foster stronger ties among these nations and contribute to more excellent stability and development in the regions it connects.
While challenges exist, the corridor’s potential economic and geopolitical advantages outweigh the obstacles. As the participating nations continue to work together to address these challenges, the India-Iran-Armenia-Russia trade route could evolve into a vital conduit for international trade, facilitating prosperity and progress for all involved parties.
