June 8, 2022
Good morning. In today’s either/view, we discuss the International North-South Transport Corridor (INSTC) and its implications for India. We also look at the newly-discovered columnar basalt formation in Telangana, among other news.
📰 FEATURE STORY
Will India benefit from the INSTC?
In international trade, there are a few powerful players at the table. Each one tries to one-up the other to see who gets to write the rules. In many ways, China and the United States have been in an arm-wrestling match on this in recent times. So where does that leave India? Do we get to have a say?
We could, with the International North-South Transport Corridor (INSTC). This multi-modal transport network to move goods from India to multiple countries in the Middle East, Central Asia, and Europe could be India putting its cards on the table. But do the costs justify the ambition? Will it help counter Chinese dominance?
The INSTC’s history began in 2002 with India, Russia, and Iran signing a tri-party agreement as the founding members. Other member states like Azerbaijan, Armenia, Kazakhstan, and Belarus, among others, have been involved as well. For example, Azerbaijan was involved in the Qazvin-Rasht-Astara railway project, an integral part of the INSTC.
India’s foreign trade policy highlighted the importance of having international trade routes to reduce costs and time. Since the INSTC is a multi-modal network, it includes roads, railways, and ships to transport freight from India. In 2014, dry runs of two routes were conducted. The first was from Mumbai to Baku (capital of Azerbaijan), and the second was from Mumbai to Astrakhan (a city in Russia).
For India, the INSTC is of particular importance for two reasons, and they both involve China. First is a broader Connect Central Asia policy. In 2013, India made it clear on wanting a closer relationship with the Shanghai Cooperation Organization (SCO) and Central Asian countries. With the Narendra Modi government, its Act East policy is seen as vital to expanding the economy and maintaining regional peace.
Recent Indo-China relations haven’t been the most peaceful. India, as it sometimes does, is doing a balancing act. While its presence in the QUAD doesn’t portray itself positively in a Chinese light, its stance on the ongoing Russian-Ukraine war is somewhat similar to China.
The second is China’s ambitious One Belt, One Road initiative (BRI). This large-scale development project was adopted by the Chinese government in 2013. While the exact cost is unknown, it’s estimated to be about $575 billion. According to the World Bank’s research, 71 economies are located along the BRI. As of 2017, these economies received 35% of global foreign direct investments and accounted for 40% of global merchandise exports.
The INSTC should also be seen in the context of India’s relations with Central Asian countries. In December, the third India-Central Asia Dialogue was held in New Delhi. India and the other countries, including Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan, reiterated cooperation and addressed emerging global concerns. Also significant is Prime Minister Narendra Modi’s 2015 trip to all five countries, a first. Their trade turnover with China runs to nearly $100 billion. Compare that with India, which is only about $2 billion.
The INSTC isn’t a cheap undertaking by any means. There are also concerns about whether it will be enough to effectively counter China’s BRI.
VIEW: Opens up trade like never before
The INSTC trade corridor will be of great promise. Broadly speaking, it will help develop India’s economic and strategic importance in Eurasia and Central Asia. Here’s how it will help. It will reduce the cost of transporting goods from India to Eurasia and the surrounding regions. A study by the Federation of Freight Forwarders’ Associations in India said the corridor will slash transit time and costs. It stated it would make freight movement 30% cheaper and take 40% less time.
During the pandemic, global trade faced high prices and supply chain bottlenecks. Remember the Suez Canal blockage? The cost of that large ship getting stuck there was about $15 million a day. The alternate routes were long. A transport corridor like the INSTC is necessary to facilitate transit and increase market access. The hope is that it would reverse, over time, the traditional model of the East as a producer and West as the consumer. After all, Asia is projected to account for 66% of the world’s middle class by 2030.
If India is to counter China’s BRI, something as big as INSTC is necessary. This was echoed by Foreign Minister S Jaishankar last November, given India’s concerns about BRI. He specifically cited Iran’s Chabhahar port as a hub and access point. Given India’s energy demand and current uncertainty, the INSTC will help diversify India’s energy sources beyond the Gulf.
COUNTERVIEW: India’s engagement remains limited
For a multi-national trade and transport project as ambitious and complicated as this, its full potential won’t be realised for quite some time. With that comes inherent geopolitical complexities and changes. There’s the issue of bottlenecks. Unlike other international frameworks, the INSTC doesn’t have a mechanism to address operational problems on the ground, i.e., customs procedures, funding, etc.
Then there’s the region that INSTC operates in. The goal is for India to have relations, not just with the member countries, but with others in the region. As political analyst Andrew Korybko wrote, the Pakistan-Afghanistan-Uzbekistan (PAKAFUZ) railway project could make the INSTC redundant concerning India’s Central Asian outreach efforts. It would virtually eliminate the possibility of the countries joining up later. One alternative is Israel’s transregional connectivity plan utilising West Asia as a shortcut to access Europe via the Mediterranean.
Finally, there are China’s plans. One project under the BRI is the $70 billion China-Pakistan Economic Corridor (CPEC). Last year, a virtual meeting between the foreign ministers of China, Pakistan, and Afghanistan resulted in a joint statement that stated the potential for Afghanistan to increase its connectivity through the CPEC. Andrew Korybko also wrote about how the BRI and CPEC are reshaping the region and could stifle India’s Central Asian approach, which is a key goal of the INSTC for India. Expectations from the INSTC should be tempered. With China’s moves, this is one balancing act that India might not be able to pull off.
What’s your opinion on this?
(Only subscribers can participate in polls)
a) The INSTC will be geopolitically and economically beneficial to India.
b) The INSTC will not be geopolitically and economically beneficial to India.
🕵️ BEYOND ECHO CHAMBERS
For the Right:
A Few Islamic Nations Forced Modi Government To Do What 200 Million Indian Muslims Couldn’t
For the Left:
Nupur Sharma Has Erred, No Doubt: But Why Are Liberals Mutedly Supporting Islamist Challenge To Her Right To Life?
🇮🇳 STATE OF THE STATES
Climate change plans (Haryana) – Haryana plans to increase its use of renewable energy in the years ahead to tackle climate change. The plan is to lower its dependency on fossil fuels and cut its carbon footprint. Currently, the state generates 1,200 MW of solar power every year. The target is to increase this by 20-30%. All departments have been given targets to outline their plans, lower emission levels to pre-2005 levels and increase the share of non-fossil fuelled power to 40% by 2030.
Why it matters: Last year, the state released its draft solar power policy superseding the 2016 policy. It stated Haryana was an agrarian state with geographical constraints, high costs, and a paucity of barren land. The policy stated the focus should primarily be on rooftop solar projects and small-scale distributed solar systems. The policy also called for EV charging stations provided by discoms.
Columnar basalt formation (Telangana) – Explorers in the state have identified a naturally-formed stone pillar site, the columnar basalt formation. It’s located in the reserved forests of the Borilalguda village. It’s the second such site in the state. As the basaltic lava flow comes to the surface through fissures and cools down, they become columnar basalts. Officials have asked the government to preserve them. Abroad, similar sites have become geo-tourism spots.
Why it matters: A similar site was identified by a member of the Kotha Telangana Charitra Brundam (KTCB) in the Shantipur Reserve Forest in 2015. The recent ones are similar to the Chincholi columns in the Beed district of Maharashtra. Other such columns have been found in Kanwad Pahad, Palasi (near Bagli) in Madhya Pradesh, and in Gujarat.
Covid services to the LGBTQ+ community (West Bengal) – According to data compiled by three NGOs, West Bengal has the biggest concentration of Covid-19 service providers to the LGBTQ+ community. The NGOs launched a pan-India online locator on queer-friendly Covid-19 services. One of the NGOs is the Kolkata-based Varta Trust. The online tool helps people search for different services and different queer community sub-sections that are served.
Why it matters: In March 2020, as the pandemic began to set in with rising cases, the LGBTQ+ community in the state demanded separate isolation wards. In the early weeks and months of the pandemic, the community was mostly neglected as the government mobilised hospitals and beds. Former Transgender Board member Ranjita Sinha said at the time that the community was in a dangerous situation as the pandemic took hold.
E-vehicle registrations (Rajasthan) – There has been a 400% rise in e-vehicle registrations in the state in the past four years. Last year saw the highest number with more than 31,000 registrations. In the current financial year, more than 11,000 vehicles have been registered so far. Officials attribute this to increased awareness of sustainable modes of transport and high fuel prices. With government subsidies, registrations of two and three-wheelers increased.
Why it matters: Last month, the state approved the Rajasthan Electric Vehicle Policy to encourage people to purchase EVs. It also approved an additional ₹40 crores for the state GST reimbursement on buying EVs. For two-wheelers, the incentive ranges from ₹5,000-to ₹10,000 based on the battery capacity.
Unrecognised villages (Manipur) – Across five hill districts of the state, there are 934 unrecognised villages, according to two prominent civil bodies. Leaders of the Co-ordinating Committee on Manipur Integrity (COCOMI) and United Naga Council (UNC) provided the data. They submitted a chart to Chief Minister Biren Singh showing the increase in villages. They requested the government to set up a Manipur State Population Commission.
Why it matters: The local bodies said there has been an increase in the number of people coming in from outside the state. They are worried about illegal immigration as the number of unrecognised villages across the hill districts has increased. They want the chief minister to deport illegal immigrants and make sure no one unlawfully enters the state.
🔢 KEY NUMBER
70 – The number of companies participating in a pilot to test a 4-day workweek in the UK. The programme is aimed to measure the productivity and well-being of employees over the coming six months.