International North-South Transport Corridor (INSTC)

International North-South Transport Corridor (INSTC)

The International North–South Transport Corridor (INSTC or NSTC) is a 7,200-km-long multi-mode network of ship, rail, and road route for moving freight between India, Iran, Afghanistan, Armenia, Azerbaijan, Russia, Central Asia and Europe.

  • The route primarily involves moving freight from India, Iran, Azerbaijan and Russia via ship, rail and road.
  • The objective of the corridor is to increase trade connectivity between major cities such as Mumbai, Moscow, Tehran, Baku, Bandar Abbas, Astrakhan, Bandar Anzali, etc.
  • This will also synchronize with the Ashgabat agreement, a Multimodal transport agreement signed by India, Oman, Iran, Turkmenistan, Uzbekistan and Kazakhstan, for creating an international transport and transit corridor facilitating transportation of goods between Central Asia and the Persian Gulf.

OBJECTIVES

  • The primary objective of the NSTC project is to reduce costs in terms of time and money over the traditional route currently being used.
  • Analysts predict by having improved transport connectivity between Russia, Central Asia, Iran and India their respective bilateral trade volumes will increase.
  • A study conducted by the ‘Federation of Freight Forwarders’ Associations in India (FFFAI) www.fffai.org found the route is, “30% cheaper and 40% shorter than the current traditional route”.
  • Analysts predict the corridor is likely to increase trade connectivity between major cities such as Mumbai, Moscow, Tehran, Baku, Bandar Abbas, Astrakhan, Bandar Anzali etc.
  • increasing the effectiveness of transport ties in order to organise goods and passenger transport along the International ‘North–South’ transport corridor
  • The promotion of access to the international market through rail, road, sea, river and air transport of the state Parties to this agreement; and
    providing security for travel and safety of goods
  • Harmonization of transport policies as well as law and legislative basis in the field of transport for the purpose of implementing this Agreement.

MEMBER STATES

The following are member states in the NSTC project:

 India,  Iran,  Russia,  Turkey,  Azerbaijan,  Kazakhstan,  Armenia,  Belarus,  Tajikistan,  Kyrgyzstan,  Oman,  Ukraine, Syria.
Observer member –  Bulgaria.

CHABAHAR NSTC INTEGRATION

  • India and Iran have a long-standing agreement, signed in 2002, to develop Chabahar into full deep-sea port.
  • Bandar Abbas port handles 85% of Iran’s seaborne trade and is highly congested.
  • Whereas, Chabahar has high capacity with plans to expand it from its current capacity of 2.5 million to 12.5 million tons annually.
  • Unlike Bandar Abbas, Chabahar has the ability to handle cargo ships bigger than 100,000 tons.[18] Industry Analysts have highlighted there are long-term plans to integrate Chabahar with the NSTC, “India is also eyeing trade with Europe via Chabahar port and the International North-South Transport Corridor”

ROUTE

  • Mumbai is at the southern hub of the route.
  • The route extends to Bandar Abbas in Iran via sea. Bandar Abbas is a sprawling port city on the southern coast of Iran, on the Persian Gulf. It occupies a strategic position on the narrow Strait of Hormuz.
  • From Bandar Abbas to Bandar-e-Anzali by road on Iranian mainland. Bandar-e-Anzali is another Iranian port but on the Caspian Seaside.
  • From Bandar-e-Anzali to Astrakhan by ship across the Caspian Sea. Astrakhan is a Caspian port in the Russian Federation. The city lies on
  • the two banks of the Volga River.
  • From Astrakhan to other regions of the Russian Federation, and further into Europe by Russian Railways.
International North-South Transport Corridor (INSTC)
International North-South Transport Corridor (INSTC)

ADDITIONAL ROUTES

  • Azerbaijan Route: The NSTC route through Azerbaijan allows India-Iran-Azerbaijan-Russia-Kazakhstan transport connectivity. Iran started construction work to complete the missing link of the Qazvin-Rasht-Astara railway
  • Chabahar NSTC Integration: India and Iran have a long-standing agreement, signed in 2002, to develop Chabahar into full deep-sea port. Bandar Abbas port handles 85% of Iran’s seaborne trade and is highly congested. Whereas, Chabahar has high capacity with plans to expand it from its current capacity of 2.5 million to 12.5 million tons annually. Unlike Bandar Abbas, Chabahar has the ability to handle cargo ships bigger than 100,000 tons. Industry Analysts have highlighted there are long-term plans to integrate Chabahar with the NSTC.
  • The Kazakhstan – Turkmenistan – Iran railway link: also known as North-South Transnational Corridor, is a 677 km long railway line connecting Kazakhstan and Turkmenistan with Iran and the Persian Gulf.
  • Southern Armenia-Iran Railway Corridor: As the key missing link in the International North-South Transport Corridor, the Southern Armenia Railway would create the shortest transportation route from the ports of the Black Sea to the ports of the Persian Gulf.
  • Trans-Iranian Canal: The idea of linking the Persian Gulf and the Caspian Sea by a canal was developed already in the late 19th century. In 2016 Russia Today reported that the Russian and Iranian governments were discussing the project.

IMPORTANCE TO INDIA

  • Analysts predict by having improved transport connectivity between Russia, Central Asia, Iran and India, their respective bilateral trade volumes will increase. 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 successful activation of the corridor will help connect India to Russia within 16-21 days at competitive freight rates leading to the development of trade on the INSTC. At present we have to either use Rotterdam port or land route via China to reach Russia and Central Asia. These are long, expensive and time-consuming.
  • It is also expected to eliminate usage of reefer containers for agro commodities and further support the supplies to Russia.
  • A study conducted by the Federation of Freight Forwarders’ Associations in India found the route is, “30% cheaper and 40% shorter than the current traditional route”.
  • For India, we can have access to the lucrative markets of Central Asia, by-passing the transit through Pakistan. Indian exports could potentially get a competitive advantage due to lower cost and less delivery time.
  • 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.
  • Potential of this route is manifold if India can bring on board its South East Asian neighbours too. The Suez Canal route takes 45-60 days, whereas the INSTC would take 25-30 days. Turkey has offered to provide necessary information for linking Black Sea Economic Cooperation (BSEC) with INSTC.

ISSUES

  • INSTC still doesn’t have a strong institutional mechanism to deal with the operational issues on the ground.
  • Problems related to customs procedure and documentation remain.
  • Issues relating to the funding of the infrastructure needed.
  • Low level of existing containerisation on the route.
  • Lack of a common border crossing rules among the participating nations.
  • Higher tariff by rail vis-à-vis road transport relating to movement from Bandar Abbas.
  • Wagon shortages.
  • Security problem emanating from Islamic insurgents east, and west of the route, and the associated hurdle of high insurance costs.

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