Although India may be using the International North-South Transport Corridor (INSTC) to hamper the China-proposed Belt and Road Initiative (BRI), its impact will be limited.
Container Corporation of India Ltd. (Concor), an Indian state-owned company, on February 25 signed a service agreement with Russian Railways Logistics Joint Stock Company (RZD) in New Delhi, to transport cargo between the two countries via the INSTC. An article published on March 19 by Russia-based RT said the opening of the corridor "will be a big boost" to trade between the two countries, and saw the signing as a "bold move against the threat of US sanctions."
Initiated by Russia, Iran and India in 2002, the INSTC provides the shortest transportation route connecting the Indian Ocean and the Persian Gulf via Iran to Russia and Europe. Using the INSTC, India and Russia will cut transport time in half, benefiting exporters and importers in both countries. By May, traders in the two countries will be able to transport goods via Iran, said Concor's chairman at the end of February.
Russia and India are the main promoters of the INSTC, but both have their own geopolitical motives.
Russia hopes to use the plan to rope in India and prevent it from getting closer with the US. India want to use the corridor to counter the BRI and amplify its involvement in and impact on Afghan affairs, bypassing Pakistan and expanding its strategic influence on Central Asia and the Caucasus.
The usage of the INSTC by India and Russia will have little impact on the BRI as their purposes differ. China pursues common development with countries along the route, with no geopolitical ambition.
The service agreement signed between Concor and RZD in February can be regarded as a pivotal step in promoting the INSTC. Yet India has many international strategies, of which the INSTC may be an insignificant one. Therefore, it still remains to be seen how valuable the corridor will be to economic cooperation and integration, and the promotion of logistics in the whole region.
Washington has always been vigilant of the plan and unwilling to see it go into operation. The US is concerned that India may develop closer ties with Russia, which was labeled one of the primary threats to US economic dominance in US President Donald Trump's 2017 national security strategy.
Another cause for US concerns lies in Iran's participation in the plan, at a time when tensions with the US have been escalating. This explains why Washington has been threatening to impose economic sanctions on New Delhi if the latter goes ahead with the plan.
We can expect the INSTC to be further promoted. But it remains uncertain how much impact it will make on regional geopolitics. Its role in upgrading Russia-India ties will be limited, as the trade volume between the two countries mainly depends on the competitiveness of their products, and India's goods are not seen as competitive in Russia's market.
The INSTC's prospects will be partially determined by Washington's stance. Although Washington hasn't yet responded to India's deal with Russia, this should not be taken as US approval of India's move. If the US firmly opposes the plan, the INSTC will have slim future prospects.