India’s Road to the North

For many years India and Russia (and before that the USSR) have maintained strong diplomatic relations, but beyond the sale of military equipment, economic relations and trade between these two Eurasian giants has never amounted to a great deal until recently. The breakup of the USSR in 1991 led to the creation of the Central Asian Stans, countries that India has attempted to court as a way of forging stronger neighbourly bonds.

Glancing at a map and it would at first appear that India is well connected with the rest of Asia, but look closer and consider geography and history and in fact India is rather isolated. The Himalayas and decades of mistrust have largely cut India off from China (although trade is growing fast between the two). India’s nemesis Pakistan to the West has decisively allied itself with China and trade between the two sub-continental neighbours is a fraction of what it could be.

So it is no wonder that India has looked elsewhere to develop stronger trade and diplomatic ties. Central Asia and Russia are also attractive partners thanks to their economic USB – namely ample supplies of oil and natural gas. India’s economy is on the move and as a result it is now the world’s fourth biggest user of energy. At the same time the country’s heavy use of coal has led to catastrophic levels of pollution in its cities. The solutions are a fast growing solar sector and the use of more natural gas, which is far less carbon intensive and polluting than coal.

Now India is behind a number of infrastructure projects to accelerate trade with Central Asia and Russia, the first is the Chabahar port in Eastern Iran. The other more ambitious project is the International North South Transport Corridor (INSTC) which is a new rail, sea and road route stretching 7200 km from Mumbai by sea to Bandar Abbas in Iran, through Iran into Azerbaijan and finally Russia.

The project has been many years in the making but finally reached completion earlier this year as Iran finished the development of the routes, building new track, tunnels and port facilities. The new route should allow for goods worth 20 – 30 million tonnes to travel between India and Russia in the near future and make trade faster and cheaper. India – Russia trade has been growing fast in the last few years and this should give it another boost.

Currently Indian – Russian trade travels by sea from Mumbai through the Suez Canal around Europe to St Petersburg taking 40 days, while the new route takes just 25 days. The successful completion of the North – South Corridor will help boost trade ties between India, Russia, Central Asia and Iran.

The success of this route will also give India more clout in Central Asia, a region which has close political and cultural ties to Moscow but whose economies are increasingly drifting to Beijing.

Some analysts see the North – South Corridor and India’s other initiatives such as the Asia Africa Growth Corridor (in conjunction with Japan) as competition with China, there is some truth to this, but they are also to an extent complementary, building and improving infrastructure should be in everyone’s interest and not just seen through the prism of geopolitical rivalry.

The INSTC also allows Indian trade to bypass Pakistan on its way into Central Asia. Pakistan has its own infrastructure project the China Pakistan Economic Corridor which includes a new sea port called Gwadar which overlooks the Arabian Sea just down the road from Chabahar.

While the Belt and Road infrastructure projects garner the most press, other nation’s initiatives are worth monitoring, particularly if they feature India, a country which looks increasingly poised to take over China’s mantle as the world’s engine of growth.