INDIA-MIDDLE EAST-EUROPE ECONOMIC CORRIDOR DEVELOPMENTS

GS3 ECONOMIC DEVELOPMENT

The India-Middle East-Europe Economic Corridor (IMEEC) is gaining momentum with recent initiatives from RITES to improve trade and connectivity between India, the Middle East, and Europe. RITES is focusing on creating a digital interface for cargo clearance between Indian and Middle Eastern ports, marking the first phase of a virtual trade corridor.

Digital Interface Connectivity Project

• RITES is developing software to streamline cargo clearances and improve export-import procedures.
• The project will integrate IT systems and logistics support to simplify documentation and clearances at ports.

Interlinking Payment Systems

• India and the UAE have agreed to link their payment platforms, integrating UPI (India) with AANI (UAE).
• The interlinking of RuPay and JAYWAN debit/credit cards will enhance financial cooperation between the two countries.

What is IMEC?

• A 4,800 km trade and transport corridor connecting India, the Middle East, and Europe.
• Announced in September 2023, it includes ship-to-rail networks and road transport routes.
• Strategically seen as an alternative to China’s Belt and Road Initiative (BRI).
• It features two corridors:
  • East Corridor: Links India to the Arabian Gulf.
  • Northern Corridor: Connects the Gulf to Europe.
• Infrastructure includes an electricity cable, hydrogen pipeline, and high-speed data cable.
• Key signatories: India, USA, Saudi Arabia, UAE, European Union, Italy, France, Germany.

Key Ports Connected

• India: Mundra, Kandla, JNPT.
• Middle East: UAE (Fujairah, Jebel Ali, Abu Dhabi), Saudi Arabia (Dammam, Ras Al Khair).
• Israel: Haifa Port (via Saudi Arabia and Jordan).
• Europe: Greece (Piraeus), Italy (Messina), France (Marseille).

Objectives of IMEC

• Establish an efficient transport network between India, the Middle East, and Europe.
• Lower costs, improve trade efficiency, and reduce GHG emissions.
• Strengthen economic ties and create employment opportunities.

Geopolitical and Economic Implications
Geopolitical Impact

• Counter China’s BRI, offering an alternative trade route.
• Strengthens international ties between Asia, Europe, and the Middle East.
• Bypasses Pakistan’s blockade, improving India’s connectivity to the West.
• Enhances India’s political and economic relationships with the Gulf nations.
• Promotes regional peace and stability.
• Expands potential to connect to Africa for broader infrastructure development.

Economic Impact

• Boosts trade, reducing India-Europe trade routes by 40% compared to the Suez Canal.
• Promotes industrial growth and generates jobs in infrastructure, trade, and logistics.
• Strengthens energy security by ensuring stable access to resources from the Middle East.
• Facilitates the development of Special Economic Zones (SEZs) along the route, attracting foreign investment.

Challenges Facing IMEC

• Logistics and connectivity issues due to multiple countries and systems involved.
• Missing rail links, especially in the Middle East.
• Challenges in coordination among countries with differing legal systems.
• Competition from existing routes, especially the Suez Canal.
• High development costs, estimated between $3 billion to $8 billion.

Infrastructure Development

• RITES is working on bridging infrastructure gaps to connect West Coast ports to the Dedicated Freight Corridor, including the Vadhavan Port, aiming to enhance logistics.

Overseas Expansion and Export Growth

• RITES is exploring Middle East consultancy projects and focusing on rolling stock exports to Latin America and Bangladesh, bidding for projects independently of Line of Credit options.