Chennai-Vladivostok Maritime Corridor | Russia's Far East | India's prospects

Why connectivity is important?

The radical transformation of the world economy in the post-WWII period – driven by globalization, trade, & tech – a vital role in connectivity.
Geopolitical dimension of connectivity projects - one of the driving forces for states to pursue policies that establish trade, investment & other commercial links.

What is it?

Chennai-Vladivostok Eastern Maritime Corridor

When announced?

2019

Parties?

India & Russia

How significant is the corridor?

Economically - increase trade relations.
Geopolitically - East Asia connectivity & presence.

History?

Chennai-Vladivostok link was operated for a few years during the Soviet period, is now being considered for revival.

Existing challenges to India-Russia Trade

Politically India & Russia have a time-tested & trusted relationship, but the economic relationship is not up to the potential level. The following are seen as the major challenges to trade ties:

Lack of connectivity (major)
Absence of private sector
Poor logistics
The decline of trade in local currencies
Limited oil & gas imports from Russia
Lack of policy clarity to increase Indian exports to Russia

Are there any previous efforts to solve the connectivity problem?

Yes, International North-South Transport Corridor (INSTC) was launched in 2000 by India, Iran, and Russia to enhance connectivity.

What is the current status of INSTC?

Slow Progress
The corridor is operational only in certain parts.

2019 meeting and its outcomes?

PM Modi visited Vladivostok in 2019 to attend both Eastern Economic Forum (EEF) and the annual Indo-Russia bilateral summit.
To rectify INSTC's slow progress & to enhance trade ties – both countries held talks.
Special focus on Russian Far East.
Both agreed to the idea of the Chennai-Vladivostok maritime corridor

The geopolitical significance of Russia's Far East (RFE)

Russia is sincerely making efforts to RFE its window to the East.
RFE is economically backward but rich in natural resources.
China & South Korea's presence in RFE is high.
India also showed interest in RFE - announced a line of credit packages for the development of RFE & to help Indian companies establish their presence there.
RFE is rich in diamond processing, petroleum & natural gas, coal & mining, agro-processing, & tourism.
Currently, Indian companies in RFE are engaged in the sectors of diamond cutting, tea packaging, coal mining, and oil & gas.
China- Russia-Mongolia corridor under BRI is already in progress.
Russia wants to diversify its investors – welcomes India to invest in RFE.

Energy cooperation

India has high energy demands.
US sanctions on Iran & the tensions in the Middle East led to a fall in India’s energy imports from the Middle East.
India wants to diversify its energy partners – trusting one region is a mistake.
Recently India-Russia energy partnership is gaining momentum.
Finalizing this energy partnership will boost this corridor.
Also, Russia's oil export power is increasing because of Arctic explorations. So this corridor will help cater energy demands of India.

What are the challenges to energy cooperation?

Oil refining capacity on India’s eastern coast is limited and old.
Most of India’s energy imports land on its western coast from the Middle East & Africa that is why high-tech refineries & Private refineries are located in the west of India.
India must work on its eastern refineries.

The Geopolitical angle of the corridor

India & Russia recently focus on East Asia.

Implications on India

Further impetus to India's Act East Policy & Indo-Pacific Policy.
India can have access to the Arctic also.
The corridor will also further increase India’s movements in South China Sea & Indo-Pacific.
India can connect to South Korea & Japan.

Implications on Russia

Russia's "pivot to the East" policy & "Greater Eurasian initiative"
Russia wants to connect the Arctic & Indo-Pacific (Northern Sea Route) to further its Greater Eurasia vision.

What are the Challenges to the corridor?

Recently Indo-Russia is slow in progress.
Russia is wary of the Quad and the US's ambitions in Indo-Pacific.
Increasing Russia-China partnership since the 2014 Ukraine Crisis.
US's sanctions on Russia are further pushing Russia towards China.
India-China relations are now all-time low - China will try to obstruct this corridor.
India is also not in the financial power to invest in the RFE or Arctic-like China.