Old trade corridor plan gets a new life

Written by Timsy Jaipuria | Subhash Narayan | New Delhi | Updated: Apr 23 2012, 09:34am hrs
With the India-Iran gas pipeline and Turkmenistan-Afghanistan-Pakistan-India gas pipeline scuppered by security concerns, the commerce ministry has fished out a decade-old proposal to link South Asia with Europe by sea, rail and roads. Designed as a trade route spanning Central Asia, the Caucasus and Russia, the unique North-South Transport Corridor (NSTC) promises to be a lucrative one for India.

The commerce ministry has called a meeting of all participating countries to evolve the project modalities. A meeting of experts and bureaucrats is also scheduled in May to work out the modalities to raise funds.

We are pushing for the corridor proposed in September 2000. Talks have been revived with Iran, Russia and a few Central Asian countries. Soon, officials from these countries will meet us to work out the modalities including transport and the investments required to build this trade corridor, commerce secretary Rahul Khullar told FE.

The NSTC is a freight route connecting South Asia to Europe via ships, trains and trucks. India, Russia and Iran agreed to develop the route in 2001. First, goods are shipped from India to Iran by ocean, from where it moves to Southern Russia across the Caspian Sea or by truck or rail. Then, goods are transported by trucks or trains along the Volga through Moscow to Northern Europe.

Indian experts feel this route is more realistic as it skips Pakistan. Security issues associated with the neighbouring country are one of the main reasons why the gas pipeline projects have failed to progress despite numerous meetings between officials of all countries. With India using the sea route to reach Iran, bypassing Pakistan, it is considered a more practical route. But global concerns about Iran could be one of the stumbling blocks over its development.

According to commerce ministry officials, the corridor could be used for bringing in resources like oil, gas, uranium and other metals into the country.

The corridor would also open up new trading markets for India in the central Asian region.

When complete, NSTC will offer a highly competitive alternative to the sea route via the Suez Canal, slashing costs and shipment time between South Asia, Russia, Northern Europe and the Persian Gulf. For example, it costs $3,500 to ship a 20-foot container from Germany or Finland to India via the Suez Canal, while the cost via NSTC would be about 30% less, said an independent trade analyst.

The corridor is a multi-network transportation system which will connect India's west coast to Iran's Bandar Abbas port. The network will move over to port of Bandar on the Caspian Sea, making its way to Rasht and Astara on the borders of Azerbaijan to Kazakhstan to Russia. Once complete, this would connect Europe and Asia in a unique way, covering the distance in just 25-30 days down from 45-60 days it takes to ship goods through the Suez Canal.

Russia regards the NSTC as part of a strategic partnership with the countries to the south and signed an inter-governmental agreement on its construction with India and Iran in September, 2000. Several other countries have since signed up to the Agreement, including Belarus, Kazakhstan, Oman and Tajikistan, while requests exists from countries such as Syria, Azerbaijan and Armenia.