A mixed report card for the IMEC

Context: In September 2023, the ambitious transcontinental
India-Middle East-Europe Corridor (IMEC) was announced on the sidelines of the
G20 summit in New Delhi. The proposed corridor is expected to reduce the
transit time between its eastern and western nodes by 40%, and costs by 30%,
compared to transportation via the Suez Canal. These numbers may vary as the
actual benefits may end up being on the lower side, but there is no denying
that the new corridor, once operational, will be a game changer for the international
maritime trade. Implementation on the northern part of the corridor is going to
move slowly until the West Asian conflict subsides, while progress is faster on
the eastern leg connecting the UAE and Indian ports.

India-Middle East-Europe
Corridor (IMEC)

·      
Overview: 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.

·      
About: The proposed IMEC will consist of Railroad,
Ship-to-Rail networks and Road transport routes extending across two corridors;
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.

Ø  Signatories - India, the US, Saudi Arabia, UAE, the European Union, Italy, France,
and Germany.

Ø  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; Europe: Piraeus port
in Greece, Messina in South Italy, and Marseille in France.

Ø  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.

Ø  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”.

·      
Geopolitical
and Economic Implications: Geopolitical
- Thwart to China’s BRI, Integration Across Civilizations, Breaking
Pakistan's Overland Connectivity Veto, Strategic Engagement with Arabian
Peninsula, Promoting Intra-Regional Connectivity and Peace, India's Strategic
Role in Africa.

Economic - Enhanced Trade Opportunities, Stimulated Industrial Growth, Job
Creation, Energy Security and Resource Access, Facilitating Special Economic
Zones (SEZs).

·      
Challenges: 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.

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.