The India-backed International North-South Transport Corridor (INSTC) could be a viable alternative to the Suez Canal, the blockage of which caused temporary disruptions in the global trade flows recently.
When Covid-19-affected supply chains were starting to recover, a mega container carrier had blocked the canal for seven days beginning from March 23. Suez Canal, a manmade waterway, is estimated to be catering to 10 percent of global trade flows on Asia-Europe trade routes.
Even as the problem was resolved and the widening of the stretch is underway, the blockage caused losses to the tune of US $10bn a day, which is about US$400mn per hour, according to some estimates.
The pandemic, in general, and the blockage, in particular, have underlined the importance of alternative routes. Euro-Asian inland transport links, mainly the International North-South Transport Corridor (INSTC), should thus be leveraged to build and boost the resilience of the inter-continental trade flows. In fact, the premise of INSTC was to provide an alternative to the Suez Canal.
Over-dependence on the canal needs to be reduced by utilizing multimodal transit transport gateways of INSTC, a 7,200 km long network of ship, rail, and road routes. The INSTC was introduced at the turn of the century by India, Iran, and Russia. It provides transit transport connectivity from India through Iran and the Caspian Sea to Russia and Eurasian countries. This initiative has since expanded to include more than a dozen countries.
Its membership represents Europe, Central Asia, Eurasia, South Asia, and the Middle East. Regional forums such as the Commonwealth of Independent States (CIS), Economic Cooperation Organization (ECO), South Asian Association for Regional Cooperation (SAARC), Central Asia Regional Economic Cooperation Program (CAREC), Eurasian Economic Union (EEU), among others, also extend their cooperation to INSTC.
Iran’s Chabahar Port has emerged as a potential eastern gateway to INSTC. India has been at the forefront in aiding the development and management of the strategic port.
This mainly serves as a gateway to India-Iran-Afghanistan Transport and Transit Corridor under a Trilateral Agreement. The potential of its complementary connectivity linkages to INSTC has also become increasingly evident.
India’s proposal for including the Chabahar Port in the INSTC project while expanding its membership base is, therefore, is “to maximize its potential”, as Foreign Minister S Jaishankar said last month. Members need to expedite efforts to include Uzbekistan and Afghanistan, among others, in this initiative.
Importance Of TIR Convention
As of now, 77 countries (and growing) which are part of the INSTC project and contiguous Europe, Africa, and Asia, among others are party to The Customs Convention on the International Transport of Goods under Cover of TIR Carnets, known as the TIR Convention, 1975.
The Convention enables inter-modal freight transportation in containerized and/or other recommended formats given one leg of an origin-destination pair is by road.
The United Nations Economic Commission for Europe (UNECE) which administers the Convention defines TIR Carnet as a standard internationally recognized Customs Document. TIR Carnet also serves as proof of an internationally valid guarantee, that is, exemption from paying Customs duties during transit.
TIR system is enabling seamless medical, economic, and humanitarian supplies to Covid-19 and conflict-stressed areas. The International Road Transport Union (IRU) that works with member countries’ Customs, and private players for TIR operations, has demonstrated TIR’s efficiencies in minimizing challenges while building resilience to shocks.
For example, when Turkmenistan’s borders were closed, IRU worked with the ECO, a 10 members’ regional cooperation organization representing a…