Policy Update
Tanmyi Anthwal
The International North–South Transport Corridor (INSTC) is a multi-modal transportation network that integrates ship, rail, and road routes for moving freight between India, Russia, Iran, Europe, and Central Asia. The corridor’s primary objective is to enhance regional connectivity, promoting trade and economic cooperation among participating nations and regions.
Background
The International North-South Transport Corridor (INSTC) is one of the most ambitious multi-modal transportation projects of the 21st century. It is changing trade dynamics across Eurasia. Established on September 12, 2000, through an agreement between India, Russia, and Iran at the Euro-Asian Conference on Transport in St. Petersburg, this 7,200-kilometer network has developed into a transportation system that connects the Indian Ocean to Northern Europe via the Caspian Sea.
What started as a partnership among three countries has grown into a coalition of thirteen member countries. This includes Azerbaijan, Armenia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkey, Ukraine, Belarus, Oman, and Syria, with Bulgaria as an observer state. The corridor is more than just logistics. It acts as a geopolitical force aimed at reducing reliance on traditional sea routes, especially the Suez Canal. It offers a faster option that can cut transit times by 40 percent and lower freight costs by 30 percent.
INSTC Network Configuration
The International North–South Transport Corridor operates through three strategically designed routes:
- Central Corridor – Originates at Mumbai’s Jawaharlal Nehru Port, proceeds to Iran’s Bandar Abbas port via the Strait of Hormuz, traverses Iranian territory through Nowshahr, Amirabad, and Bandar-e-Anzali along the Caspian Sea coastline, and terminates at Russia’s Olya and Astrakhan ports
- Western Corridor – Links Azerbaijan’s railway infrastructure to Iran’s network through the twin border cities of Astara, subsequently connecting to India’s Jawaharlal Nehru Port via maritime routes.
- Eastern Corridor – Establishes connectivity between Russia and India through the Central Asian transit states of Kazakhstan, Uzbekistan, and Turkmenistan.
These three complementary corridors form an integrated transportation matrix that provides multiple routing options for cargo movement while ensuring operational flexibility.
This major infrastructure project promises to transform trade relations between India, Russia, and Europe. It also aims to enhance connectivity in Eurasia. The corridor provides landlocked Central Asian nations with new access to global shipping networks while promoting economic ties across various political and cultural backgrounds.
Objectives
- Transport System Optimization – Improve the effectiveness of multi-modal transport operations, and significantly reduce transit times for goods and passengers across the corridor network.
- Market Access and Trade Facilitation – Promote international market access through integrated rail, road, maritime, river, and air transport systems, while expanding trade volumes between member states.
- Security and Safety Framework – Ensure strong protection and secure transit conditions for cargo and passengers throughout the transportation network.
- Regional Connectivity and Integration – Establish strong connections linking South Asia, Central Asia, and European markets through a unified transport infrastructure.
- Policy and Legal Harmonization – Bring transport policies, regulatory frameworks, and laws among member states into agreement to enable seamless cross-border operations.
- Economic Development Catalyst – Speed up sustainable economic growth across participating nations by making the movement of commercial goods more efficient and fostering regional cooperation.
These combined goals position the INSTC as a transformative transportation corridor that strengthens economic integration and improves connectivity across the Eurasian landmass.
Benefits
Economic Efficiency:
- Cost and Time Reduction: This project achieves 30% savings on costs and 40% shorter transit times. It cuts delivery periods from 45-60 days to 23 days for European destinations.
- Export Competitiveness: Lower logistics costs improve India’s position for commodities in global markets.
Infrastructure Development:
- Strategic Hub Formation: Iran and Azerbaijan act as transit centres, while Nagpur and Bhiwandi serve as India’s logistics coordination points.
- Port Optimization: This improvement increases the operational capacity of Chabahar and facilities in the Caspian Sea.
Market Access:
- Central Asian Integration: It tackles connectivity issues with landlocked economies and avoids Pakistani territory.
- Energy Resource Access: This corridor helps India acquire hydrocarbon supplies from the region.
- EAEU Market Entry: Potential free trade agreements could open access to 173 million consumers.
Strategic Integration:
- Multi-lateral Synchronization: Working with the Ashgabat Agreement and BSEC frameworks increases commercial opportunities.
- Future Connectivity: There are potential connections with Baltic, Nordic, and Arctic corridors for access to European markets.
Geopolitical Advantages:
- Alternative Trade Routes: This creates pathways that reduce dependence on the West and provide strategic autonomy for participating nations, enabling more diversified economic partnerships and reducing vulnerability to external sanctions or trade restrictions. Such routes offer flexibility in global commerce and strengthen regional economic resilience.
- Supply Chain Innovation: The elimination of refrigerated container requirements in agricultural exports significantly reduces logistics costs and complexity, making regional trade more efficient and economically viable for smaller producers and developing economies. This technological advancement creates competitive advantages in perishable goods trade and enhances food security across the region.
- Regional Influence: This strengthens India’s presence in Central Asia as a counterbalance to other major infrastructure initiatives. Unlike China’s Belt and Road Initiative, which has faced criticism for creating debt dependencies and prioritizing Chinese economic interests, this approach emphasizes mutual benefit, regional connectivity, and shared sovereignty. The initiative positions India as a collaborative partner rather than a dominant creditor, offering an alternative model for infrastructure development.
- Strategic Autonomy Enhancement: This initiative enables participating nations to diversify their diplomatic and economic partnerships, thereby reducing their over-reliance on traditional power blocs. This multi-alignment approach allows countries to pursue their national interests while maintaining balanced relationships with major powers, fostering a more multipolar regional order that respects sovereignty and promotes collective prosperity.
Constraints
- Institutional and Governance Deficiencies. There is a lack of strong institutions to coordinate multinational operations and handle disputes between countries. This creates administrative delays and slows down decision-making.
- Infrastructure and Financial Limitations. Key rail and road systems are underdeveloped. Containerization facilities are inadequate, and there is not enough funding for essential infrastructure projects.
- Regulatory Fragmentation. Different customs procedures, documentation requirements, and border crossing rules among participating countries create bureaucratic obstacles and slow down operations.
- Geopolitical Complications. International sanctions on Iran and Russia disrupt trade flows, complicate financial transactions, and make it harder to access global supply chains through the corridor.
- Security and Cost Concerns. Regional threats from insurgency along parts of the corridor lead to higher insurance costs and more security requirements, which raise overall transportation expenses.
Comparison of INSTC and Suez Canal Route
| Factor | INSTC Route | Suez Canal |
| Transit Time | 20-25 days(India-Russia) | 40-60 days |
| Cost | 30% cheaper | Higher fees & congestion delays |
| Route Flexibility | Multi-modal(ship, rail, road) | Primarily maritime |
The International North-South Transport Corridor represents a strategic departure from traditional Suez Canal dependency. Unlike the canal’s singular maritime pathway, the INSTC distributes operational risk across multiple transport modes and territories. The corridor operates independently of maritime weather constraints and seasonal navigation limitations that periodically disrupt canal traffic. Additionally, the INSTC’s routing through allied nations provides enhanced political stability compared to the Suez Canal’s exposure to regional conflicts and potential blockages. This diversified infrastructure reduces Western-controlled maritime dependency while strengthening strategic autonomy for participating nations.
Current Status
The INSTC has proven it can operate effectively through targeted testing and recent geopolitical events. In August 2014, the Federation of Freight Forwarders Associations in India conducted in-depth dry runs on the Nhava Sheva-Bandar Abbas-Baku and Nhava Sheva-Bandar Abbas-Amirabad-Astrakhan routes. The evaluation showed that transit costs are favourable for Indian exporters and importers using Bandar Abbas to reach Russia and other Commonwealth of Independent States (CIS) countries.
Recent geopolitical issues have sped up progress. The conflict in Ukraine strengthened Russia’s commitment, while Iran renewed its engagement. The 2021 blockage of the Suez Canal highlighted the need for this route as a reliable maritime option.
Infrastructure Progress:
- India-Iran Chabahar Port is operational
- Azerbaijan’s Astara Port has received major upgrades
- Russia is actively using the network following the sanctions in 2022
- Member states are discussing digital customs systems and a unified tariff structure
Way Forward
To realize the INSTC’s potential, coordinated action is necessary across various areas. Improved financing methods should focus on involving the private sector while managing risks related to security and political stability. It is also essential to standardize tariffs and customs processes to reduce bureaucratic delays. Member nations need to enhance information sharing and launch initiatives to boost demand, addressing the current trade volume gaps between South Asia, Southeast Asia, and European markets. Creating industrial parks and special economic zones in the pharmaceutical and agricultural sectors can enhance commercial viability. Achieving success relies on ongoing political commitment and strengthening institutions to turn the INSTC into a fully functioning trade route that reshapes commercial relations in Eurasia.
References
About the contributor: Tanmyi Anthwal is a Research Intern with IMPRI.
Acknowledgment: The author sincerely thanks the IMPRI team for their valuable support.
Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.
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