In recent years India has embraced an ambitious and expansive vision for foreign trade in the Central Asian region. India’s trade with Afghanistan and Central Asia has long been hindered by an inability to access land routes through Pakistan.
The development of Iran’s new port at Chabahar has transformed India’s trading prospects in the region by allowing India a trade route that bypasses Pakistan altogether.
Alongside the development of the Chabahar Port, a number of investments have been made in projects intended to develop physical connectivity in the Central Asian region.
In 2018, Uzbekistan began a railway project connecting Herat and Mazar-i-Sharif near the Uzbek border. This railway line will connect to the Chabahar-Zahedan railway line along the Afghanistan-Iran border which is projected to be concluded in 2024.
In 2020, India, Iran and Uzbekistan established a trilateral working group to coordinate joint use of the Chabahar Port and work on various connectivity projects in the region with a particular emphasis on the Shahid Beheshti Terminal at the Chabahar Port.
In 2022, following hostilities in Ukraine, India and Russia have established enormous trade volumes in agricultural produce and energy resources. Russia’s need for more reliable trading partners for its exports has served to validate the existing emphasis on regional connectivity while also presenting a fresh case for further investment and accelerated development.
The changing geopolitical scenario has worked to India’s advantage in a number of ways. Firstly, with energy prices increasing globally and fears of food shortages abounding, fears of inflation are well-founded and countries are scrambling to ensure energy and food security for their populations.
India is no exception and has explicitly placed the needs and livelihoods of its population above ideological posturing. With Europe seeking to avoid trade with Russia to the extent possible and a number of additional sanctions and price caps being mulled, Russia is eager to find a source for its exports of food, fertilizers and energy.
The environment of sanctions and curbs has afforded India a valuable opportunity to meet these needs at attractive prices. India is seeking to convert this temporary benefit to something more permanent according to Japan Oil, Gas and Metals National Corporation (JOGMEC) analyst Mika Takehara.
According to Takehara, Indian experts and policy-makers are considering increasing Russian oil imports to 30 PC of India’s total intake by buying on the spot market while reducing their dependence on long-term contracts with Middle Eastern exporters.
Simultaneously, Indian state-run corporations such as Bharat Petroleum are reportedly attempting to negotiate long-term oil deals with Russia. In addition to providing India with an avenue for energy and food security, elevated trade volumes with Russia have served as proof of concept for the viability and value of the International North-South Corridor (INSTC) as a route capable of handling large volumes of trade as well as making a convincing case for more investment on connectivity projects around the INSTC.
A number of recent conferences including the recent meeting of the Shanghai Cooperation Organization (SCO) have produced a broad consensus amongst Central Asian Nations, Iran, Russia and India that underlines the importance of the INSTC, the Chabahar Port.
Finally, the establishment of this route has served to free India of the difficulties caused by its geographic location and Pakistan’s obstruction of regional trade. In addition, the INSTC affords India an alternative route to operate in and an opportunity to counter-balance China’s attempted monopolization of trade routes in the region through its Belt and Roads Initiative (BRI) and investments in Pakistan.
The prospects of the INSTC appear to be brighter in the long run as a project conceived and furthered through the mutual interest of a large number of nations in contrast with the BRI which is intended purely to further Chinese strategic interests and has greatly aggrieved local residents and generated much backlash in many of the locations where its projects have been established.
India has invested substantial time, attention and capital in the development of the Chabahar Port and infrastructure and connectivity in Afghanistan. With the Chabahar Port operational, the INSTC emerging as a viable trading route and increased investment in regional connectivity in the offing, this investment is beginning to bear fruit.
India’s efforts in this regard have greatly expanded her influence in Iran and Afghanistan and provided India with a prominent role in Central Asia. The emergence of a viable trading route that bypasses Pakistan offers an alternative to the Chinese Silk Roads project and serves to protect crucial Indian imports against supply shocks and offers valuable alternatives at attractive prices. In time, the focus on INSTC and the Chabahar Port could prove to be one of India’s most shrewd decisions. (Milap News Network)
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