February 2023

India’s Look-West diplomacy gets a boost

Amid the flux of ongoing Russian aggression in Ukraine, India is escalating trade ties with the Eurasian nations and deepening its links with Central Asia. Richard Gregson reports

Staying on the course of an independent foreign policy and mutually-beneficial cooperation with its Central Asian neighbours, India is steadily expanding its footprint in trade, investment and people-to-people contacts in the former Soviet republics, as well as the Russian federation. The Ukraine war is leading to new alliances and changing relationships between countries, and New Delhi is determined to play an important role in the emerging geopolitical scenario, while maintaining its neutrality in the big power game.

India’s leading role in a series of meetings held in the region over the past year, and its growing cooperation with the Commonwealth of Independent States (CIS), have already started to pay dividends. Although China has been a major player in the region, its debt diplomacy and lack of respect for other nations’ economic and political sovereignty has made the communist giant a suspect in the developing world.

India has meanwhile been engaging with partners in Central Asia, Iran and Russia, for continental transit and access rights. It has been vocal on economic and security issues in forums such as the Shanghai Cooperation Organisation (SCO) and BRICS (Brazil, Russia, India, China and South Africa), and engaged in proactive dialogue with the Eurasian Economic Union (EAEU) and the Collective Security Treaty Organisation (CSTO). A jewel in the crown for India is the International North-South Transport Corridor (INSTC) and the Chabahar port project – sort of an alternative to China’s Belt & Road Initiative (BRI).

Chabahar Port
The India-built Chabahar Port in Iran connects INSTC to Mumbai in India, effectively by passing Pakistan and Afghanistan

INSTC is a multi-modal 7,200 transportation route linking the Indian Ocean and Arabian Gulf to the Caspian Sea via the Chabahar Port of Iran. The corridor also connects to northern Europe via St Petersburg in Russia. Freight from India, Iran, Azerbaijan and Russia will be transported via ship, rail and road. The trade route connects major cities such as Mumbai, Moscow, Tehran, Baku, Bandar Abbas, Astrakhan and Bandar Anzali. The sea route runs from Mumbai to Bandar Abbas in Iran and then to the country’s Bandar-e-Anzali in the Caspian Sea to Russia via Central Asia. The India-built Chabahar Port in Iran connects INSTC to Mumbai in India, effectively bypassing Pakistan and Afghanistan, makingit a secure trade route.

The first test shipment between Russia and India via Iran reached Mumbai in June last year. Two 40-foot containers with wood laminate sheets were transported by train from St. Petersburg to the Russian Caspian Sea port of Solyanka in Astrakhan, from where the containers were shipped to the Iranian Caspian Sea port of Anzali. The cargo was carried across Iran by rail to Bandar Abbas port in the Persian Gulf and then shipped by sea Mumbai. The cargo reached India in 24 days, compared with the much longer period it would have taken via the traditional Suez Canal trade route. The INSTC is 30 percent cheaper and 40 per cent shorter than the traditional route via the Suez Canal, a survey conducted by Federation of Freight Forwarders Associations in India (FFFAI) found.

India has been vocal on economic and security issues in forums such as the Shanghai Cooperation Organisation

Opening up the corridor will give a big fillip to India’s external trade. Russia and India are committed to increasing bilateral trade by $5 billion annually over the coming four years. India is also working on a free trade agreement with the Eurasian Economic Union, whose members include Armenia, Belarus, Kazakhstan and Kyrgyzstan, as well as Russia. INSTC will also strengthen India’s energy security. Its oil imports from Russia are increasing, and the corridor will help the country to bypass maritime bottlenecks created by Western sanctions on Russian crude.India’s import of crude oil from Russia in December 2022 topped one million barrels per day, making Russia India’s largest oil supplier.

At the traditional informal meeting of the CIS heads of state in St Petersburg on December 26–27, leaders underlined the significance of the Eurasian’s region’s transport and logistics architecture provided by INSTC, and the linking of the corridor with the Chabahar Port, jointly developed by India and Iran. Russian President Vladimir Putin said that the speedy launch of the 7,200 km-long, multimodal trade corridor, starting from Mumbai, with nodes in West Asia, Central Asia, Caucasia and Russia, will cover large swathes of territory in landlocked Eurasia and is ‘aimed at turning the Caspian Sea region into a major international logistics hub’.

The first test shipment between Russia and India via Iran reached Mumbai in June last year.

For the first time, on December 6 last year, the National Security Advisors/Secretaries (NSAs) of India and Central Asian countries met in New Delhi at the invitation of India’s National Security Advisor Ajit Doval, to discuss issues like terror financing, counter-terrorism efforts, Afghanistan and connectivity between India and Central Asia. The participants ‘agreed that connectivity initiatives should be based on the principles of transparency, broad participation, local priorities, financial sustainability, and respect for sovereignty and territorial integrity of all countries’, a joint communique issued at the end of the meeting said.

‘We stand ready to cooperate, invest and build connectivity in the region. While expanding connectivity it is important to ensure that the initiatives are consultative, transparent and participatory,’ NSA Doval told the meeting. The meeting strongly backed India’s proposal to integrate Chabahar with INSTC.

The India Ports Global Chabahar Free Zone (IPGCFZ), a special purpose vehicle of India Ports Global Ltd incorporated in Iran, has been operating the Chabahar Port since 2018. Ever since, the Shahid Behesti Terminal of Chabahar Port has seen an increase in transit cargo traffic between Central and South Asia through the corridor. India has shipped millions of tonnes of wheat and pulses as humanitarian aid to Afghanistan since 2020, during the Covid-19 pandemic, and later through the Chabahar Port.

India has also been expanding its trade and investments in Central Asian countries. Data from 2020 show more 190 Indian companies have invested some $1.2 billion in Azerbaijan. India has defence ties with Armenia and has struckdeals worth $250 million to supply military hardware, ranging from Pinaka multi-barrel rocket launchers (MBRL) to anti-tank weapons.The country is a popular destination for Indian students and businesses.

Then there is India’s Border Roads Organisation (BRO) constructing the 4.44-km, eight-lane Dushanbe-Chortut Highway, which will decongest the Tajikistan capital and is on the verge of completion. India has given a $20 million grant for the project.

Pinaka multi-barrel rocket launchers
DEFENCE DEALS: India has struckdeals worth $250 million to supply Armenia with military hardware, including Pinaka multi-barrel rocket launchers (MBRL) to anti-tank weapons

India has extended a $448 million Line of Credit (LoC) for social infrastructure and other development projectsin Uzbekistan. The aid is helping the country to equip secondary schools in Syrdarya region with computers, and setting up of a modern reference laboratory at the Republican Scientific Specialised Allergo logical Centre for diagnosis, management and treatment of allergic disease. India’s strategic partnership with Uzbekistan includesa US$ 40 million LoC for the procurement of defence equipment from India.

Kyrgyzstan, Kazakhstan and Turkmenistan are also closely working with India on different projects and have been extended soft loans.

India’s determined push to realise the full potential of Chabahar Port by linking it with INSTC will go a long way to promote mutually beneficial bi- and multi-lateral relations with Central Asia, Eurasia and the Middle East, and will provide a safe, viable and cheaper alternative interregional transport corridor to both the traditional deep Suez Canal and China’s BRI.

Richard Gregson is a freelance journalist currently based in Canada