Sun, Dec 22, 2024 | Jumada al-Aakhirah 21, 1446 | DXB 0°C

Work on India-UAE leg of $20b trade corridor set to kick off

IMEC is widely viewed as a counter to China’s intercontinental Belt and Road Initiative

Published: Thu 27 Jun 2024, 8:24 PM

By
Issac John

A worker walks past a container ship at Mundra Port in the western Indian state of Gujarat. The digital platform will harmonise vessel, voyage, and cargo-related procedures between the ports on India’s western coast including, Mundra, Kandla, and Nhava Sheva and the UAE including Jebel Ali and Fujairah. — Reuters file

Work on the India-UAE leg of the $20 billion transcontinental India-Middle East Europe Economic Corridor (IMEC), widely viewed as a counter to China’s intercontinental Belt and Road Initiative, is set to kick off with a digital platform to exchange information between ports of the two countries.

The initiative, aimed at connecting ports of both countries and enhancing trade efficiency, is likely to be operational within the first 100 days of the Modi 3.0.

The digital platform will harmonise vessel, voyage, and cargo-related procedures between the ports on India’s western coast including, Mundra, Kandla, and Nhava Sheva and the UAE including Jebel Ali and Fujairah. The intent is to migrate to a digital platform, as a first step, for exchange of vessel and voyage-related documents between the ports on both sides of this maritime leg. This will improve operational efficiencies and simplify compliance requirements thereby facilitating trade and ease of doing business, according to experts.

The IMEC, a proposed 4,800 km long route comprising a railroad, ship-to-rail networks, and road transport routes extending across two corridors, was announced in September 2023 in New Delhi on the sidelines of the G20 Summit. This followed a meeting between the leaders of India, the US, the UAE, Saudi Arabia, Italy, France, Germany, and the European Commission.

The ambitious project intends to increase efficiency, reduce costs, secure regional supply chains, increase trade accessibility, enhance economic cooperation, generate jobs, and lower greenhouse gas emissions, resulting in a transformative integration of Asia, Europe, and the Middle East.

Strategically, the IMEC is viewed as a counter to China’s BRI, although its scale and scope are relatively limited.

India’s external affairs minister S Jaishankar recently said that the delay in implementation of the IMEC because of the current situation in the Middle East was a matter of “concern.” However, he added that all the parties to the agreement had reconfirmed their commitment to it.

A key element of the IMEC strategy is seamless movement of cargo from, say, Mundra to Haifa in Israel which will mean common port and customs documentation across the countries — from India and UAE to Jordan and Israel — and standardised equipment and containers in all ports and dry docks. Once in place, the plan is to ship goods from the Indian ports to Haifa in 48 hours. But that will also require construction of missing rail links in parts of Saudi Arabia and Jordan, for which initial assessment is being undertaken.

The project includes the development of a mega port at Vadhavan in Maharashtra for efficient operations. Cabinet approved developing a major greenfield port at Vadhavan in Maharashtra as part of the corridor.

Analysts said India and other partners of the IMEC have a lot riding on the project. It will be a pity if the project, the estimated cost may be about $20 billion, languishes till the Middle East crisis is over. One view is to do as much work as possible on the trade corridor now and leave the rest for later. The India-UAE leg is the first one that may be worked on.

“From a Gulf perspective, the new venture will solidify the region’s historical position as the primary trade route linking Asia, Europe and Africa. By emphasizing trade in energy, the project is banking on the region’s comparative advantage in providing cheap and reliable energy to the rest of the world,” Abdel Aziz Aluwaisheg, GCC assistant secretary-general for political affairs and negotiation, wrote in a column.

The project holds economic promise for India through its large diaspora in the Middle East, contributing to energy security and serving as a market for Indian goods. It will help position India strategically, fostering influence over the Indian Ocean and expanding reach into Mediterranean, Atlantic regions, according to analysts.

The corridor will unlock sustainable and inclusive economic growth for all stakeholders, including the UAE and Saudi Arabia, both leading trade partners of India, and create new trade routes and facilitate increased trade between India, the Middle East, and Europe. This would open up opportunities for the UAE and Saudi Arabia to expand their export markets and attract foreign investment.

The IMEC project will have two components: the east corridor connecting India to the Arabian Gulf, and the northern corridor connecting the Gulf to Europe with railway lines that, upon completion, will provide reliable and cheaper cross-border ship-to-rail transit than existing sea and road transport routes.