India-Middle East-Europe Corridor

• 19 Sep 2023

For Prelims: India-Middle East-Europe Corridor, G20 Summit, Greenhouse Gas (GHG), Belt and Road Initiative (BRI), Eurasian region, SEZs (Special Economic Zones).

For Mains: India-Middle East-Europe Corridor, its Significance for India and Challenges.

Source: TH

Why in News?

Recently, the India-Middle East-Europe Economic Corridor (IMEC) Project was signed at the G20 Summit in New Delhi, which holds significant geopolitical and economic implications for India.

• The project forms part of the Partnership for Global Infrastructure and Investment (PGII). PGII is a values-driven, high-impact, and transparent infrastructure partnership to meet the enormous infrastructure needs of low and middle-income countries.

What is the India-Middle East-Europe Economic Corridor (IMEC) Project?

• About:
  • The proposed IMEC will consist of Railroad, Ship-to-Rail networks and Road transport routes extending across two corridors, that is,
    • The East Corridor – connecting India to the Arabian Gulf,
    • The Northern Corridor – connecting the Gulf to Europe.
  • The IMEC corridor will also include an electricity cable, a hydrogen pipeline and a high-speed data cable.

• Signatories:
  • India, the US, Saudi Arabia, UAE, the European Union, Italy, France, and Germany.
• Ports to be Connected:
  • India: Mundra (Gujarat), Kandla (Gujarat), and Jawaharlal Nehru Port Trust (Navi Mumbai).
  • Middle East: Fujairah, Jebel Ali, and Abu Dhabi in the UAE as well as Dammam and Ras Al Khair ports in Saudi Arabia.
    • Railway line will connect Fujairah port (UAE) to Haifa port (Israel) via: Saudi Arabia (Ghuwaifat and Haradh) and Jordan.
  • Israel: Haifa port.
  • Europe: Piraeus port in Greece, Messina in South Italy, and Marseille in France.
• Objective:
  • It aims to create a comprehensive transportation network, comprising rail, road, and sea routes, connecting India, the Middle East, and Europe.
  • It aims to enhance transportation efficiency, reduce costs, increase economic unity, generate employment, and lower Greenhouse Gas (GHG) emissions.
  • It is expected to transform the integration of Asia, Europe, and the Middle East by facilitating trade and connectivity.
• Significance:
  • Upon completion, it would provide a “reliable and cost-effective cross-border ship-to-rail transit network to supplement existing maritime and road transports”.

What are the Geopolitical and Economic Implications of IMEC?

• Geopolitical:
  • Thwart to China’s BRI:
    • IMEC is seen as a potential counter to China's Belt and Road Initiative (BRI) in the Eurasian region.
    • It can serve to counterbalance China's growing economic and political influence, especially in regions with historically strong ties to the U.S.
  • Integration Across Civilizations:
    • The project can strengthen ties and integration across continents and civilizations.
    • It offers a strategic opportunity for the U.S. to maintain influence and reassure traditional partners amidst China's growing influence in the region..
  • Breaking Pakistan's Overland Connectivity Veto:
    • IMEC bypasses Pakistan, breaking its veto over India's overland connectivity to the West, a hurdle persistently faced in the past.
  • Strategic Engagement with Arabian Peninsula:
    • The corridor deepens India's strategic engagement with the Arabian peninsula by establishing enduring connectivity and elevating political and strategic links with nations in the region.
  • Promoting Intra-Regional Connectivity and Peace:
    • IMEC has the potential to promote intra-regional connectivity and could help reduce political tensions in the Arabian peninsula.
    • It holds the prospect of becoming an "infrastructure for peace" in the region.
  • India's Strategic Role in Africa:
    • The corridor's model could be extended to Africa, aligning with the US and EU's plan to develop a Trans-African corridor.
    • This signifies India's intent to strengthen its engagement with Africa and contribute to its infrastructure development.
• Economic:
  • Enhanced Trade Opportunities
    • IMEC presents a transformative opportunity for India to boost economic growth by enhancing its trade connectivity with key regions.
    • The route could significantly reduce transit times, making trade with Europe 40% faster compared to the Suez Canal maritime route.
  • Stimulated Industrial Growth:
    • The corridor will create an efficient transport network for the seamless movement of goods.
    • This will encourage industrial growth, particularly in regions connected to the corridor, as companies will find it easier to transport raw materials and finished products.
  • Job Creation:
    • As economic activities expand due to improved connectivity, there will be a surge in job opportunities across sectors.
    • The growth in trade, infrastructure, and allied industries will necessitate skilled and unskilled labor, promoting employment.
  • Energy Security and Resource Access:
    • The corridor can facilitate secure energy and resource supplies, especially from the Middle East.
    • Reliable access to these resources will stabilize India's energy sector and support its growing economy.
  • Facilitating Special Economic Zones (SEZs):
    • The corridor can be strategically leveraged to develop SEZs (Special Economic Zones) along its route. SEZs can attract foreign investment, promote manufacturing, and drive economic growth in these designated zones.

What are the Challenges to the India-Middle East-Europe Corridor (IMEC)?

• Logistics and Connectivity Issues:
  • Developing a multimodal transport corridor involving rail, road, and sea routes spanning multiple countries requires complex logistical planning and coordination among stakeholders.
  • Selecting the most viable and cost-effective routes, assessing the feasibility of rail and road connections, and ensuring optimal connectivity are key challenges.
• Missing Rail Links and Construction:
  • Significant portions of rail links are missing, especially in the Middle East, requiring substantial construction efforts and investment to complete the rail network.
• Coordination among Multiple Countries:
  • Coordinating efforts, policies, and regulations among multiple countries with diverse interests, legal systems, and administrative procedures is a major challenge in realizing this cross-continental corridor.
• Potential Opposition and Competition:
  • Opposition or competition from existing transport routes, especially Egypt's Suez Canal, which may see reduced traffic and revenue, could pose challenges and diplomatic hurdles.
• Cost and Financing:
  • Estimating and securing adequate financing for the construction, operation, and maintenance of the corridor is a significant challenge.
  • The costs for development are estimated to be substantial, and funding sources need to be identified.
    • Initial estimates suggest that developing each of these IMEC routes could cost anywhere between USD 3 billion to USD 8 billion.

Way Forward

• Achieving technical compatibility and standardisation in terms of gauges, train technologies, container dimensions, and other critical aspects across different countries is vital for seamless operations.
• Balancing the geopolitical interests of participating nations and addressing potential political sensitivities, especially regarding Israel, is crucial for smooth implementation.
• Addressing environmental impact concerns, ensuring sustainability, and adhering to green and eco-friendly practices in construction and operation are critical aspects of the project.
• Implementing robust security measures to safeguard cargo and infrastructure from potential threats, theft, piracy, and other security risks is essential.