Foreign Policy Watch: India-SCO

PM Modi pitches for ‘Full Transit Right’ among SCO members

Note4Students

From UPSC perspective, the following things are important :

Prelims level : International North–South Transport Corridor (INSTC)

Mains level : Read the attached story

With Pakistan PM listening, Prime Minister Modi urged Shanghai Cooperation Organisation member states to “give each other full right to transit”.

Why in news?

  • PM Modi framed the right to transit in the context of connectivity and how it could help establish reliable and resilient supply chains in the region.

Why did PM pitch this?

  • Lack of transit across Pakistan’s territory has been a challenge for India to access Central Asian markets.
  • Iran’s President also said that despite the impressive potential, infrastructural connections in the field of transit between members of the SCO are not so extensive.
  • Iran already provides special priority to the development of the North-South Corridor and has made huge investments.

What is International North-South Transport Corridor (INSTC)?

  • The INSTC is a 7,200 km-long multimodal transportation network encompassing sea, road, and rail routes to offer the shortest route of connectivity.
  • It was established on 12th September 2000 in St. Petersburg, by Iran, Russia and India for the purpose of promoting transportation cooperation among the Member States.
  • It links the Indian Ocean to the Caspian Sea via the Persian Gulf onwards into Russia and Northern Europe.
  • It will move freight between India, Iran, Afghanistan, Armenia, Azerbaijan, Russia, Central Asia and Europe.

Significance of INSTC

  • Trade facilitation: INSTC is aimed at reducing the carriage cost between India and Russia by about 30 percent and bringing down the transit time by more than half.
  • New corridor in making: It has the potential to transform the economies of countries along the corridor into specialized manufacturing, logistics, and transit hubs by facilitating access to newer markets.
  • Multimodal transit: The recent Suez Canal blockade, which cost the global economy hefty damage amounting to US$9 billion, has amplified the optimistic outlook towards the INSTC as a cheaper and faster alternative multimodal transit corridor.

Benefits offered to India

  • Export promotion: The INSTC connects India with Central Asia, and Russia, and has the potential to expand up to the Baltic, Nordic, and Arctic regions, increasing the scope of trade multifold.
  • Ease of trade: For India, it provides a shorter trade route with Iran, Russia, and beyond to Europe, creating scope for increased economic engagement.
  • Alternative Route to Central Asia: It opens up a permanent alternative route for India to trade with Afghanistan and Central Asia, given the hurdles in the direct route through Pakistan.

 

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