Dr. Syama Prasad Mookerjee Research Foundation

The India Middle East Europe Corridor: Pivot to India

The announcement of the India Middle East Europe (IME) corridor during the G20 summit meeting in Delhi was a strategic masterstroke. India’s G20 Presidency provided the country the platform to cement its role at the heart of global geopolitics and establish itself as a great power. Using the same platform to formally launch the IME corridor has provided international endorsement of India’s preeminent role in global trade, economy, and geo-politics.

The IME corridor essentially represents a pivot to India and the Indian ocean region. Let us examine why this is the case. In the post pandemic (and post Russia-Ukraine conflict) world, economies are extremely wary of disruptions to critical supply chains related to food, energy, and natural resources. The IME corridor serves as the anchor for the Asia-Europe trade-lane, with extended linkages to African economies on the Indian ocean. The corridor essentially links Africa, Asia, Middle-East to Europe, and through trans-Atlantic routes from Europe with North America. India is the anchor of this massive connectivity network.

The very nature of the infrastructure being planned underscores this geo-strategic reality. Rail and pipeline infrastructure will help by-pass the Suez Canal-the traditional choke point of the maritime route connecting the Indian and Atlantic oceans. If needed, such multi-modal options will provide adequate redundancy to the Suez route through multimodal rail and road connections. These multi-modal options will also reduce transit time (by almost 40% by some estimates) between Indian ocean economies and the west. Pipelines will allow alternative means to transport not just oil and natural gas but will provide the future means (with adequate technology development) to transport green hydrogen.

Planned electricity grids will be able to power economies across this vast region by leveraging surplus energy production wherever possible. Imagine if the massive solar potential of India and Middle Eastern economies can be exported and therefore monetized to meet the energy demand across Eurasia. The IME is forward looking and is therefore being planned with future technology that will allow cheap storage and efficient transport of renewable energy across grids. The on-land and under-sea digital cable networks provide the infrastructure for digital integration that would underpin the global economy of the future.

Improved connectivity and reduced costs with key markets in the west provides a massive economic opportunity for India. In combination with Prime Minister Gati Shakti Master Plan (PMGS) that will significantly reduce hinterland logistics costs in India, the country can emerge as the preferred destination for global investment for a wide range of industries. With the right policies (of which PLI is just the start) and effective ease of doing business, India would be able to leverage the economies of a scale of its 1.4 billion market to attract huge investments and expand productivity capacity.

India’s take-off would be qualitatively much better than China’s in the late 1990s given that there is much greater trust by investors in India’s democratic rule-of-law based systems, and that India’s mature domestic market is far more accessible and transparent relative to China’s in the 1990s. IME corridor would also play a critical role in ensuring India’s own priorities for resource and energy security.

The launch of the IME corridor therefore represents to a pivot to India in economic and geopolitical terms by the west and other major democratic powers. But in order to ensure that this pivot optimally serves India’s needs, a few things would need to be thought through and pursued by Indian policymakers.

First, use the competitive opportunity provided by the corridor to optimize investment into the country and support the expansion of Indian industry with sustained focus on investment promotion, ease of doing business and effective implementation of PMGS to develop hinterland infrastructure.

Second, use India’s economies of scale and competitiveness provided by the corridor to attract technology intensive industries into India and enable long-term technology transfer. Since the corridor itself is futuristic in design, especially in relation to energy related technologies of the future, India should prioritize its own innovation and R&D that will help its firms and start-ups to become leaders in this field.

Third, geo-strategically, India needs to ensure that over time India’s own International North-South Corridor (INSTC) becomes integrated with the IME corridor. Not only do the corridors complement each other, by connecting Russian, Central Asian and Iranian natural resources and industries to the wider Europe-Asia trade network, such integration of these two corridors will be a big boost for energy and resource security. This will also help IME corridor to not just counter BRI, but effectively make it insignificant in terms of overall economic importance in the longer-run.

India has critical vested interest in this. Iran and Russia represent two key swing states in geo-politics. Both are crucial to India’s own strategic needs. Iran borders Pakistan and Afghanistan and has the ability to disrupt the Persian Gulf shipping lanes of the IME. It is also a key transit state for energy and resources to flow directly from Russia and Central Asia to India. Finally, it has been a traditional supplier of energy and other natural resources to India. An Iran that is closely aligned economically with India will ensure additional pressure on Pakistan. It will also deny China’s outsize ability to draw Iran into its own strategic orbit.

Just like US is using the IME to settle disputes between Arab states and Israel, thereby denying China and Russia the strategic space to meddle in this region, India should use its anchor role in IME corridor to gradually work towards rapprochement between the US and Iran, and between Israel and Iran. The economic opportunity provided by IME, and the economic prospects for Iran from joining the IME in the long-term (including having inter-linkages between INSTC and IME) can become a major incentive for the Iranian regime to pursue a less aggressive and conciliatory approach.

Similarly, India should work hard to reduce tensions between Russia and the west in the longer-term. While this sounds next to impossible in the current context, over time the economic prospects of an IME-INSTC linkage will provide a very strong incentive for all sides concerned to consider a process of normalization. As has been pointed out several times by Indian strategic experts, Russia that is completely in the Chinese orbit would be a disaster not just for India, but for the western democracies as well. It needs to be reiterated that an INSTC-IME corridor linkage would effectively make the only successful leg of the BRI-the China to Europe corridor, an economic side-show and deal a major blow to the future of BRI.

IME corridor has not just launched a corridor, it has announced the beginning of the Great Game for the 21st century. The geo-strategic and economic competition that will define the 21st century, and indeed India’s role in the world has now officially begun. India needs to play the long-game. It can do so by leveraging its market size to maximize trade opportunities, investment and technology transfer arising out of this corridor. It would also need to leverage its role as the pre-eminent guarantor of security in the Indian ocean to drive its own strategic agenda. After all the IME is fundamentally a multi-modal connectivity project centred around the Indian ocean and represents a global pivot to the Indian ocean region, and India as the anchor country of the region would have both the influence and ability to drive strategic decisions over the long-term.

Prime Minister Modi and his team has just pulled a massive strategic coup. IME allows India the means to fully re-establish itself as the dominant geo-political and economic force between Red Sea and the Malacca Straits, stretching from Yemen to Singapore. Let us hope that the nation will have the continued wisdom and strategic depth in our leadership to make the most of this opportunity.

Dr. Pritam Banerjee is a Senior Research Fellow with Dr Syama Prasad Mookerjee Research Foundation.