Exporters are readying back-up routes to send their shipments to the nations belonging to the Commonwealth of Independent States (CIS), including Russia, as the war in Ukraine continues to intensify.
Three routes are being explored.
The first is the China route using Qingdao port.
The second is the International North-South Transport Corridor (INSTC) route that connects Mumbai to Moscow via Iran and Azerbaijan.
The other is the one that traverses between Hamburg in Germany and Poti port in Georgia, industry sources said.
Right now, shipping lines to Russia via the Black Sea are suspended.
Even if the war ends, the key existing trade routes via the Black Sea may not be immediately used and this calls for the need to explore alternative routes to send shipments from India, an industry official said.
However, the focus is mainly on Russia because among the CIS nations, two — Russia and Ukraine — receive around 80 per cent of the exports to the region.
Azerbaijan, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan, and Ukraine are the 11 CIS nations.
Exporters said they are keen on utilizing the INSTC, a multi-nation trade corridor developed by India, as well as the other route via Hamburg.
Though the route using Qingdao is being explored, the key challenge is acute congestion, and China giving priority to its own cargoes.
Besides that, re-establishing the route from north China to Russia will also take time, an executive said.
“We are also looking at other options (in terms of trade route) for India.
“The INSTC is a cost-effective route.
“The voyage time is 40 per cent of the duration when the conventional route is used.
“If we want to utilise this route, this is the time,” said the executive.
The INSTC is a project — with India, Iran, and Russia as its founding members — that was operationalised four years ago to establish a shorter trade route between India and CIS countries.
But it continues to be mired with challenges.
“The problem is that on the INSTC route (focused on Chabahar port in southern Iran), there are no regular shipping lines to Chabahar, probably because of inadequate volume.
“Considering the current situation, exporters are hoping that volume will go up in this route and with necessary volumes, shipping lines will be regularly moving on that track,” said another executive.
“Second challenge is related to banking.
“Though Chabahar (port) is not under sanction, a lot of Indian banks are reluctant to deal with documents where goods move through Chabahar to Central Asian countries.”
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