Russia and Iran are strengthening the North-South Corridor to India

/in /by

By Marek Grzybowski

The railway supports ports. The Rasht-Caspian Sea railway connection allows goods to be transported from Russia to Iraq and India. A few days ago, a train started running on the tracks of the newly built railway line connecting the Persian Gulf with the Caspian Sea. It connects the border countries of the Caspian Sea and Central Asia with the Indian Ocean. In the initial phase, the connection will enable the transport of 7 million tons of goods, and ultimately 10 million tons. The importance of the connection increases enormously with the restriction of shipping in the Gulf of Aden and the growing exchange between Russia, Iran and India.

The Rasht-Caspian Sea rail link was opened a week ago in the presence of Iranian and Russian officials, Mehr news agency reported. Representatives of investors participated in the inaugural ceremony of the departure of the train with containers. The ceremony took place with the participation of the acting President of Iran Mohammad Mokhber and his accompanying delegation, as well as adviser to the President of Russia Igor Levitin. The Deputy Prime Minister of Azerbaijan also participated in the ceremony.

The railway will connect the ports of the Indian Ocean and the Caspian Sea
The project was mainly implemented in Gilan Province in northern Iran. The Rasht-Caspian Sea link is part of the International North-South Transport Corridor (INSTC), which connects the Persian Gulf with the Caspian Sea via a rail route. According to reports by Iran’s IRGC television, the length of the last section of this railway line is 1,468 kilometers.
Less than a year ago, Iran inaugurated a railway connection between Rasht and Bandar Anzali, one of the most important Iranian ports on the shores of the Caspian Sea. It is located north of Tehran and south of Baku. Even though this railway section had existed for over a year, it lacked a connection to Iran’s main railway network. With the Qazvin-Rasht line, this connection is finally operational and INSTC is becoming more complete.
The rail connection from Rasht to Astara (in Azerbaijan on the Caspian Sea) on the Iran-Azerbaijan border remains to be finalized. Its commissioning will be ensured by a railway connection connecting Russia, Azerbaijan and Iran. This, in turn, will provide access to the Indian industrial market and vice versa. According to the latest reports, the construction of the Rasht-Astara line is expected to be completed in 2028, although it was initially planned to start operations in 2024. However, there is a possibility of accelerating the project given the demand for the transportation of strategic raw materials and weapons between countries participating in the INSTC.

Russia and Iran are strengthening the North-South Corridor
The International North-South Transport Corridor (INSTC) includes maritime links, rail routes and road networks to transport goods from South Asia to Europe through Central Asia, the Caucasus and Russia. The corridor contains routes used primarily to transport goods between the ports of India and Iran. From Iran, the cargo moves through the Caspian Sea to southern Russia.
Road and rail connections are also used. The containers or goods are then transported by truck or rail along the Volga River through Moscow to Northern Europe. The Russian Federation, Iran and India signed an agreement on the expansion of the route back in 2001. India was the active initiator of this connection. The Indian government has done a lot to bring together countries, including Iran, Russia and Central Asian countries, as well as Bulgaria, to push the idea of ​​INSTC and its implementation.
In addition to the above-mentioned countries, this project covers Azerbaijan, Armenia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkey, Ukraine, Belarus and Oman. However, more than 20 years passed before the first cargo was moved along the planned corridor. The first commercial shipment in the INSTC network took place only in July 2022.

It’s cheaper and faster in the Corridor
Dr. Nivedita Das Kundu from India calculated that before the launch of connections under the INSTC project corridor, the time needed to transport cargo to Moscow from Mumbai was 40 to 60 days. Currently, the transit time is approximately 25 – 30 days and the transportation of goods takes 40% less and is 30% cheaper, according to data shared by the Federation of Freight Forwarders’ Associations in India and the Ministry of Commerce.
– Initial freight of $1,300 to $1,800 is estimated for a 20 foot container. $3,500 for reference containers to St. Petersburg, which then goes to Moscow. Total cost $2,100 to $2,800 per container. Transit time 25 to 30 days and 7 days from Moscow to St. Petersburg – calculated by Dr. Kundu, who reports on the Valdai website that the main operators operating on this route are Maersk, Hamburg Süd, MSC and CMA.
Activity in using the new corridor has increased significantly after the United States and the European Union imposed broad sanctions on Russia in response to its invasion of Ukraine in February 2022.

We bypass sanctions through the corridor
– International sanctions imposed on Moscow and Tehran restrict their access to global financial markets and international trade. As a result, both countries are seeking to expand economic ties with neighboring countries in Western and Central Asia to bypass these sanctions, notes Dr. Umud Shokri, a Washington-based expert in foreign policy and energy geopolitics, author of the book “US Energy Diplomacy in the Caspian Sea Basin: Changing Trends.”
Iran and Russia are working to strengthen their trade ties and improve their shared transport infrastructure. One of the key trade routes between Iran and Russia is the International North-South Transport Corridor (INSTC), a multimodal transport network connecting India and the Persian Gulf with Russia and Northern Europe. Today, the transport corridor is crucial for Russia-Iran relations and trade. But India and other Asian countries also benefit from its patency.
Already in 2022, INSTC served as a corridor through which strategic raw materials were transported to India. Russian coal went to India this way. Russia transports coal to India via the North-South International Transport Corridor. INSTC has assumed the function of an energy corridor between Russia and India. Russian coal is transported south along the INSTC to the Iranian port of Bandar Abbas in the Indian Ocean. From there, the coal is shipped to Indian ports. Russia announced the use of INSTC at the International Economic Forum in St. Petersburg.

Corridor for coal, containers and weapons
Iran and India have long been looking for broader opportunities for economic cooperation, and both countries are interested in developing INSTC. This corridor fits perfectly logistically with the markets for the supply of strategic raw materials and armaments. India is primarily interested in creating a trade corridor to Russia, bypassing its rival Pakistan.
Iran, in turn, is interested in obtaining a strategic role as a transit country and deriving financial benefits from it. Strengthening relations with large, close neighbor India is also crucial for sanctioned and isolated Iran. According to reports from there, Iranian shipping company IRISL is facilitating Russian-Indian trade. The company announced that it had allocated 300 containers for the transport of goods between partners from both countries. According to Iranian and Indian media, the company also said it would allocate more containers as demand for containers increases.

To further develop INSTC and increase the capacity of its ports, India has acquired the southern Iranian port of Chabahar, which is an important infrastructure hub for it to improve connectivity with Russia, Central Asia and Europe, bypassing Pakistan. The government in New Delhi has spent over $100 million on expanding the port’s infrastructure and superstructure since 2003. This is yet another example of the strategic role of seaports in the implementation of the state’s economic policy.
Chabahar port is not yet fully operational. Iran is still building a 700-kilometer railway line that will connect the port with the catenary in the city of Zahedan. Such a connection could increase the attractiveness of freight transport through the port and along INSTC, for which it will be the terminal point. This is another proof that the strength of the country’s economic connections and the strength of sea ports depend on good land infrastructure.

Photos. GospodarkaMorska.pl; https://gulfif.org; https://valdaiclub.com/; Shutterstock/Peter Hermes Furian.