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India to accede to the Ashgabat Agreement on transit corridor

The Union Cabinet has given its approval for India to accede to the Ashgabat Agreement, an international transport and transit corridor.

The agreement facilitates transportation of goods between Central Asia and the Persian Gulf.  India would become party to the Agreement upon consent of the founding members.

Accession to the Agreement would enable India to

  • Utilise this existing transport and transit corridor to facilitate trade and commercial interaction and ties with the Eurasian region.
  • Synchronise India’s efforts to implement the International North South Transport Corridor (INSTC) for enhanced connectivity.
  • It will provide India an opportunity for reorientation of the freight traffic from the traditional sea route to land transcontinental routes.

About Ashgabat Agreement

  • It is a transit agreement established in year 2011.
  • It establishes international transport and transit corridor between Central Asia and the Persian Gulf countries.
  • Its founding members are Uzbekistan, Iran, Turkmenistan and Oman. Kazakhstan had joined the grouping in 2015.

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India, Russia sign customs pact to boost trade

India and Russia have signed a customs and liberalize business visas agreement to boost trade between both countries to remove the hindrances and boost commerce.

This pact will help to rapid clearances of imported goods at the land and sea ports and addresses the issues related to the non-tariff barriers. Both countries also have fixed a target of US 30 billion dollars to be achieved by 2025.

This agreement will play important role proposed International North-South freight corridor (INSTC) for trade from India to Russia to central Asia through Iran.

Presently, bilateral trade between both nations is extremely low and it was just 9.51 billion dollars. In Ufa, Russia prior to BRICS ministerial meeting Prime Minister Narendra Modi and his Russian counterpart President Vladimir Putin had discussed ways to increase bilateral trade.

Both countries also had reached an agreement on setting up a Joint Study Group which will recommend contours of a Free Trade Agreement (FTA) between India and Eurasian Economic Union (EEU) comprising Russia, Kazakhstan, Belarus and Armenia.

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INSTC, India’s strategic gateway to Central Asia and Eurasia

The International North-South Transport Corridor (INSTC) is considered as gateway for India to expand trade and investment links with Central Asia and Eurasia.

Its importance was highlighted in India’s Foreign Trade Policy of India 2015-20.

However, recently it gained importance in light of the evolving geopolitical developments of India after Prime Minister Narendra Modi’s visit to 5 Central Asian Countries viz Uzbekistan, Kazakhstan, Turkmenistan, Kyrgyzstan and Tajikistan.

International North-South Transport Corridor (INSTC)

  • It is a multi-modal trade transport network that includes strategic rail, road, and water transport connecting India with Central Asian and Eurasia Countries.
  • Route: It will connect Mumbai (India) via Chabahar and Bandar Abbas ports of Iran with Baku (Azerbaijan) to Moscow (Russia) and other countries in Central and Eastern Europe via the Caspian Sea.
  • Economic Integration: It will help in facilitating India’s economic integration with Eurasian economies and other countries in surrounding regions.
  • If India partners with Eurasian Economic Union (EEU), it will further boost and expand its economic, trade and investment opportunities in more countries in this region.
  • Shorter transport route: It will be a shorter route to transport goods to Eurasian and Central Asian regions compared to present route via Suez Canal and western European countries. Thus, reduce the cost of transporting goods from India to Eurasia.
  • Natural resources access: It will help India to tap the abundant natural resources potential of Central Asian countries for its energy security. These countries are having rich deposits of petroleum, natural gas and uranium along with deposits of fertilizer inputs such as potash.
  • Exports: Many sectors in this region are becoming increasingly service-oriented which can benefit India to export expertise in information technology and IT-enabled services.

Implications

For India, the INSTC will be strategically important trade corridor of tremendous promise that could help to develop its economic and strategic importance in Eurasia and Central Asia. It could also give India economic and strategic relevance to tackle regional ambitions of China through its One Belt, One Road Initiative.

Map Source: CIA

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