A trans-Europe-Asia express journey

The Europe-West Asia-India transit corridor reinforces Europe’s shift away from Russian energy sources in favour of supply from the Persian Gulf, a part of which is processed in India for re-export. The corridor also establishes an alternative to the Suez Canal, which is emerging as a choke point for just-in-time global supply chains. A rail bridge between the Mediterranean and the Indo-Pacific should improve access to manufacturing planning a shift out of China, thereby supporting India’s ambition of increasing its share of goods trade. The participatory nature of funding the railway and shipping lines provides an alternative template to China’s Belt and Road Initiative (BRI) for building trading infrastructure in developing economies. The US regains influence in West Asia, where it has been losing bargaining power over energy pricing, and in the Indo-Pacific, where China has stitched together the largest trading bloc.

For India, the corridor presents a partly overland trade route that has remained elusive because of political instability to the northwest. The inclusion of green energy and digital connectivity offers India bigger scope in areas it is building competitive advantage. India is offering its digital infra to interested nations and is planning a big push in becoming a low-cost green hydrogen producer. Accelerated logistics buildup domestically could serve a bigger portion of manufacturing trade from the Indo-Pacific, apart from its own exports. The corridor builds on strategic cooperation between the US and India involving transfer of dual-use technology to develop indigenous defence production.

It may be a ‘big deal’, as Joe Biden put it, but the details and timelines will make all the difference. Trade is fragmenting along ideology, ecology and finance. The corridor hopes to find sustainable solutions to all three. India’s inclusion, apart from the immediate benefits to trade, should draw it deeper into a value-based economic framework that falls short of a trade bloc the US is piloting for the Indo-Pacific.