Eurasian Development Bank Advocates Soft Infrastructure Measures for INSTC

The Eurasian Development Bank (EDB) has emphasised the necessity of soft infrastructure improvements to maximise the potential of the International North–South Transport Corridor (INSTC). According to recent recommendations, creating robust and high-quality infrastructure, such as the Chabahar Port and its connecting railway in Iran, is crucial for the success of the INSTC and its competitive services.

The INSTC, a multimodal transport network designed to link India, Russia, and Central Asia, aims to streamline trade routes and reduce dependency on traditional shipping routes through the Suez Canal and Black Sea ports. Currently, the absence of direct rail or road links between India and Central Asia results in lengthy and costly shipping routes, with air transport being the only direct but costly alternative for high-value or perishable goods. This has led to increased transport costs and reduced competitiveness in trade.

Despite existing political agreements, such as the Turkmen-Indian statement from April 2022, and the INSTC’s shorter route of 4,700 km from Mumbai’s Jawaharlal Nehru Port to Tashkent, the volume of trade remains modest. In 2022, trade between India and five Central Asian nations amounted to just $3.2 billion, hindered by the extensive distances of 7,000-10,000 km via traditional routes. The EDB’s report outlines that while the INSTC will not entirely replace the Suez Canal’s cargo flow, it provides a vital alternative for smoother trade operations. To realise the full benefits of the INSTC, the EDB recommends several soft infrastructure measures. These include establishing regular container services between Mumbai and Central Asia via Iran, creating a favourable tariff environment, and streamlining mutual trade and transport facilitation agreements.

Further, the EDB advocates for bilateral road transport agreements, particularly with Central Asian states, to address vehicle weight, dimension requirements, and the recognition of third-party semitrailers. Simplifying visa procedures for transport personnel, expanding customs cooperation, and implementing digital tools for customs formalities are also critical to enhancing the INSTC’s efficiency. The EDB’s recommendations underscore the importance of integrating both physical and administrative improvements to bolster the INSTC’s effectiveness. By addressing these soft infrastructure needs, the INSTC can better support trade growth and economic development across its participating regions, offering a more competitive and efficient alternative to existing transport routes.