Closer links, faster growth: A new economic corridor

The India-Middle East-Europe Economic Corridor (IMEC), announced at a side event of the New Delhi G-20 Summit, co-chaired by Prime Minister Narendra Modi and US President Joe Biden, is going to take forward a much larger initiative — the Partnership for Global Infrastructure and Investment (PGII). 

The US, India, Saudi Arabia, UAE, France, Germany, Italy and the European Union signed an MoU for working together to develop this corridor. It was the G-7 Summit in Germany that launched the ambitious PGII for infrastructure partnership with low and middle-income countries.  

IMEC aims at facilitating trade across India, the Middle East and Europe through a network of railway tracks and shipping routes. This landmark corridor is expected to stimulate economic development through enhanced connectivity and economic integration across two continents, thus unlocking sustainable and inclusive economic growth. It aims to usher in a new era of multimodal connectivity leveraging railways, ports and surface transport.  

According to the MoU, the IMEC would be comprised of two separate corridors, the Eastern Corridor, connecting India to the Arabian Gulf, and the Northern Corridor, connecting the Arabian Gulf to Europe. In the Eastern Corridor, the connectivity would come up from Mundra Port to Fujairah Port in UAE and then via railroad, cross over to Jordan, and from Jordan to Haifa port in Israel through a dedicated freight corridor. Haifa is a major seaport located on Israel’s Mediterranean coastline. The Northern Corridor would connect Haifa to France, Italy and Greece. The advantage that one can see is the nature of economies, the dimension of engagements and new institutional mechanisms that are likely to come up in the next few years.

While talking about the importance of connectivity, it would be interesting to mention here concepts like “growth poles” which refer to a centre in abstract economic space from which centrifugal forces emanate and to which centripetal forces are attracted. 

In Asia, we also saw the rise of the idea of growth triangles for minimising the initial costs by taking advantage of existing infrastructure facilities and promoting cost competitiveness in exports. 

A similar concept — “economic corridor” — captures the mechanics of achieving the predictions of the growth pole theory. These concepts can help in exploring further the possibilities of engagement, which present scope for expansion and integration in view of the ever-evolving economic scenario at regional and multilateral levels. 

An economic corridor, which borrows the spatial perspectives, envisages a gradual path of evolution of a growth corridor, starting from a transport corridor to a logistics corridor, to an economic corridor, and then to a growth corridor. The IMEC could help in working collectively for effective implementation of the agenda of inclusive and sustainable development of the region it would be connecting.

The member countries would play an extremely important role in recreating the India-Middle East Economic Corridor which, in ancient times, was called the Red Sea Route. It linked the Roman and Egyptian empires with Indian states on the western coast, namely, Gujarat, Maharashtra and Kerala. The Red Sea is one of the first large bodies of water mentioned in recorded ancient history. It was important in early Egyptian maritime commerce and was used as a water route to India.

IMEC fits very well with another initiative, I2U2, launched in July 2022 with four countries — India, Israel, the US and the UAE. This initiative has tried to strengthen trade and value chain linkages and led to the launch of the I2U2 Innovation Centre in Gurugram in Haryana. It also envisages the Agriculture Innovation Mission for Climate. With Italy joining the IMEC initiative, there is also the likelihood of their getting connected with the I2U2 (making it I3U2).

In the recent past, India has also made an effort to bring in connectivity with those destinations where India’s trade interests are going up. The recently signed Free Trade Agreement (FTA) with the UAE has created a huge opportunity for expansion of the bilateral linkages and has deepened trade cooperation. At this point, trade with the UAE stands at $85 billion and investment at $15 billion annually. With Saudi Arabia, India’s imports are at $42 billion and exports at $11 billion; with Jordan, Indian trade stands at $3 billion.

Regional aspirations

The launch of IMEC is also reflective of several regional aspirations for identifying new routes and connectivity measures for overcoming challenges like trade disruption and insulating national economies from other exigencies. The India-Myanmar-Thailand Trilateral Highway (IMT Highway) is being extended to Laos and Cambodia.

With immense scope for plurality in connectivity along the highway, there could be added emphasis on taking forward other major initiatives like the Asia-Africa Growth Corridor and Southeast Asia-India-Southwest Asia-Europe Corridor for the benefit of the Indian manufacturing sector and a wider export footprint. Other initiatives like the Abraham Accords between Israel, Bahrain and the UAE for promoting cooperation in the Middle East are also indicative of the new dynamism as PGII is trying to interconnect these parallel efforts. As the IMEC promises sustainable solutions in terms of finance, ecology and above all, ideology, India can look forward to fulfillment of the objective of a value-based economic framework.

It is also pertinent to mention here that the ‘Make in India’ and success of Production Linked Incentive (PLI) schemes would crucially depend on the focused expansion of the Sagar Mala and Bharatmala initiatives that would bridge ports and inland waterways across countries and continents. With the emphasis on ‘Make in India’ involving low carbon footprints, the IMEC can give a boost to the Indian manufacturing sector and exports. 

A delicate balance

The IMEC would also facilitate laying of cables to boost digital connectivity as well as connecting communities. With enhanced people-to-people contact and participation of communities, we may eventually aspire to have sustainable economic growth and ensure inclusive outcomes through these interventions.

In the media commentaries, IMEC is being seen as a credible challenge to China’s Belt and Road Initiative (BRI).  Here, it may be pertinent to point out that connectivity initiatives like IMEC should be termed as growth corridors that can act as growth engines for bridging the gap of unequal industrialisation and development in different regions. This can help in generating more jobs, raising per capita income and mitigating income inequalities. Thus, there is enough scope for different initiatives that are on the table and may come up for discussion in future. 

The issue, however, shall always remain valid that the principle of national sovereignty can never be ignored or compromised. Countries with respect for mutual sensitivities eventually would move forward to partnerships. One would have to ensure this delicate balance while the world moves forward on the path of realisation of the Sustainable Development Goals for the benefit and well-being of not only humanity, but the protection of the environment at large. 

(The author is director general at Research and Information System for Developing Countries in New Delhi. Views are personal.)