Russia’s urgency to ensure that International North South Transport Corridor (INSTC) reaches its logical fruition i.e. connecting Russia (St Petersburg) with South Asia (Mumbai), has gained momentum. Last year, at the Kazan Forum 2023, Russian Deputy Prime Minister Marat Khusnullin announced Moscow’s plan to invest 280 billion rubles (about USD 3.5 billion) until 2030 in the development of the INSTC. He was confident of the cargo targets to touch nearly 30 million tons by 2024; and 35 million tons by 2030 (155 % more than in 2021) averaging 100 million tons of cargo annually.

The 7200 kilometer long INSTC is multimodal ship-rail-road route and first came to the drawing board in 2000. Azerbaijan, Kazakhstan, Turkmenistan, Iran, India, Iraq, Tajikistan, and Uzbekistan are the major stakeholders. Over the last two and half decades significant progress has been made; but the rate of infrastructure development has been extremely slow due to a number political-economic reasons.

It merits mention that the north-south corridor is not new; the Russian desire to connect the Caspian Sea to the Indian Ocean dates back to the 19th century. In 1889-1892, engineers of the Russian Empire had drafted proposals for the construction of the canal. The Iran-Caspian Sea route gained strategic importance during World War II and was used to transport military equipment and materials from the United States and the United Kingdom as a part of the Lend-Lease Act.

There are at least four important reasons for the growing importance of the INSTC in the Russian strategic calculus and therefore the urgency to operationalize it. First, the April 2021 Suez Canal blockage by M V Ever Green, a container vessel which got stuck between the canal banks. The incident slowed down global trade between Europe, Asia and the Middle East for nine days and caused disruptions in supply chains resulting in an estimated US$ 54 billion loss to the global economy. It triggered Russia as well as many other countries, particularly Iran, to explore alternate routes. Iranian Ambassador to Russia Kazem Jalali observed that the “North-South corridor is a great option to replace the Suez Canal with a reduction in travel times to 20 days and savings of up to 30 percent,” and “the need to speed up the completion of infrastructure and the North-South corridor as an alternative to the route through the Suez Canal has become clear and more important than ever.”

The second trigger is the ongoing Russia-Ukraine war and the western sanctions which impacted on Russian supply chains as also placed limitations on Russian flagged vessels to call at ports in US, UK, and the European Union. This prompted Russia to use the Caspian Sea- Iran-Indian Ocean route as a sanction-free route and engage in international maritime trade. Iranian Consul General in Astrakhan Mehdi Akushekyan told “We will see this corridor [INSTC] in full development in the near future. Russia and Iran have a common main message: “No to sanctions!”

Closely associated is the third reason i.e. before the Russia Ukraine war, the Northern Corridor i.e. Rail links from Russia to the west had served well , and there was “little economic sense in big investments in shipping infrastructure in the Caspian”. Now that the Northern Corridor is in jeopardy, it is incumbent for Russia to look for alternate routes.

Fourth, it has been Soviet Union/Russia’s strategic vision to maintain presence in the Indian Ocean. The British decision to withdraw from major military bases East of Suez offered an opportunity for the Soviet Union to deploy an Indian Ocean Squadron in the late 1960s. A decade the Soviet Indian Ocean Squadron comprised of 32 ships and submarines and had access to naval-air-military facilities in several Indian Ocean countries (Madagascar, Mozambique, the Comoros, Mauritius, Djibouti, and the Seychelles). Post-Cold War, in February 1991, the Soviet Indian Ocean Squadron withdrew from the Indian Ocean, and military facilities at Ethiopia’s Dahlak Island and Yemen’s Socotra Island were wound up. Today, Russia maintains a few naval ships in the Indian Ocean and they engage in a variety of military, diplomatic and non-combat missions.

The realization of the INSTC is also dependent on the shipping capacity in the Caspian Sea. In 2019, there were 2199 vessels operating in the Caspian Sea: Russia 1655 vessels (612 tankers and 692 small cargos); Iran (65 tankers and 82 small cargos); Azerbaijan (61 tankers and 27 small cargos); and Kazakhstan and Turkmenistan own a limited number of vessels. This capacity is considered limited and keeping in mind the “increasing trend of export and import between Iran and Russia, at least 100 [more] ships are needed.”

It has been noted that “shipbuilding and maintenance will be a growth industry in the Caspian [which] is under-serviced in vessels and requires specific designs to cater for its relatively shallow depth, occasional bad weather conditions and the sheer volume of freight needing maritime transport. This will spur a great deal of new shipbuilding activity in the main Caspian shipyards.”

In May 2023, Russia and Iran signed an agreement to build and acquire 20 ships. A few months later, in October 2023, Russia signed an agreement with the Indian state-owned Goa Shipyard Limited (GSL) to deliver 24 ships (chemical tankers, bulk carriers, and container ships) in three years. Dmitry Dubovik, General Director of the North-South Caspian International Integration Club has stated that the first four vessels will be laid down in the first quarter of 2024.

The above development is noteworthy and should trigger many Indian enterprises dealing with maritime infrastructure (shipping, shipbuilding, ship repair, ship recycling, supply chains, port development etc.) to explore opportunities being provided by the Caspian Sea burgeoning maritime-marine market.

Dr. Vijay Sakhuja is associated with Kalinga International Foundation, New Delhi, and is Emeritus Professor of Research, SoA Center for Integrated Maritime Studies and Research (SOACIMSR), Siksha 'O' Anusandhan University, Bhuvneshwar, Odisha, India.