In a significant development, Russia has dispatched its first coal shipments to India using the International North-South Transport Corridor (INSTC). This multimodal route, spanning 7,200 kilometers (4,500 miles), includes railways, roads, and seaports, connecting St. Petersburg to Mumbai, India. This initiative is part of Russia’s strategy to explore new trade routes in response to Western sanctions, which have redirected its trade focus from Europe to Asia and the Middle East.
According to Russia’s national railway company, two trains loaded with coal from the Kuzbass region embarked on this journey, traveling through Kazakhstan, Turkmenistan, and reaching the Iranian port of Bandar Abbas. This marks the first time such a shipment has been sent via the INSTC, demonstrating the corridor's potential as a vital link between Russia and India.
Boost for India's Trade
The INSTC holds immense significance for India, particularly as it now manages Iran’s Chabahar Port for an initial ten-year period. This port is a crucial node in the corridor, enhancing regional connectivity and providing India with a strategic alternative to China’s Belt and Road Initiative. The INSTC is expected to improve trade efficiency with Central Asia, Afghanistan, and further regions, offering a cost-effective route that bypasses the traditional Suez Canal pathway.
Trade experts highlight that the INSTC's development will facilitate Indian traders’ access to Iran, Russia, Azerbaijan, and the Baltic and Nordic countries, not just the Central Asian region. This alternative route gains importance as global trade routes face disruptions, such as the 2021 Suez Canal blockage and recent conflicts affecting the canal’s traffic.
The Energy Dimension
India has significantly increased its coal imports from Russia, particularly metallurgical coal used in steel production and thermal coal for power generation. This shift is partly due to lower prices and the impact of the Ukraine war, which has redirected Russian coal supplies from Europe to other markets, including India.
In the last three years, India’s imports of Russian metallurgical coal have tripled to around 15.1 million tonnes in 2023-24, while imports from Australia have declined. Russia’s share in India’s total metallurgical coal imports has risen from 8% in 2021-22 to 21%, driven by cost benefits. However, this trend may change as Russia plans to impose an export tax on metallurgical coal, potentially increasing logistics costs.
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