The ceasefire between Israel and the Palestinian group Hamas came into effect after 15 months of a devastating war on January 19, and the very next day, Adani Group Chairman Gautam Adani met Reuven Azar, the Israeli Ambassador to India, and other officials. “Had productive discussions on doing our part in supporting India-Israel collaboration, particularly regarding the India-Middle East-Europe Economic Corridor (IMEC) and defence partnerships,” Gautam Adani said in a social media post soon after the meeting.

With signs of peace returning in the Middle East and Donald Trump coming back as the US President, setting up IMEC—a new global trade route—is set to be resurrected soon.

A new global trade route

As part of the Partnership for Global Infrastructure and Investment (PGII) initiated by G20 member countries, a memorandum of understanding (MoU) was signed by India, the European Union (EU), Germany, Italy, France, the US, Saudi Arabia, and the UAE at the G20 Summit in New Delhi on September 9, 2023. “The IMEC is expected to stimulate economic development through enhanced connectivity and economic integration between Asia, the Arabian Gulf, and Europe,” says the MoU document.

The IMEC will include two separate corridors—the east corridor connecting India to the Arabian Gulf and the northern corridor connecting the Arabian Gulf to Europe. It will consist of dedicated rail connectivity for a reliable and cost-effective cross-border ship-to-rail transit network to supplement existing maritime and road transport routes—enabling goods and services to transit between India, the UAE, Saudi Arabia, Jordan, Israel, and Europe. Along the railway route, the participant countries will lay cables for electricity and digital connectivity and pipelines for clean green hydrogen export.

Experts say the ports of Mumbai, Mundra, Kandla, Mangalore, Mormugao, Kochi and Vizhinjam in the Arabian Sea coast will be the major starting points to the India corridor of IMEC, linking to Jebel Ali port in the UAE. From there, a rail network will traverse through Al Ghuwaifat in UAE, Haradh and Al-Haditha in Saudi Arabia, and Jordan, and will connect with the Haifa port in Israel. It will further connect to the second corridor gateway ports of Piraeus in Greece, Messina in Italy, and Marseille in France. 

Securing regional supply chains, increasing trade accessibility, improving trade facilitation, and supporting an increased emphasis on environmental social, and government impacts were highlighted for setting up the route. The corridor will increase efficiencies, reduce costs, enhance economic unity, generate jobs, and lower greenhouse gas emissions—resulting in a transformative integration of Asia, Europe and the Middle East. The MoU was the result of initial consultations.

At the G20 Summit in New Delhi, it was decided to meet within two months to develop and commit to an IMEC action plan with relevant timetables. However, that did not happen as the Hamas–Israel war started on October 7, 2023. A mini-lateral meeting on IMEC with India, Israel, the UAE and the US as participants scheduled in October 2023 was postponed indefinitely. However, some progress was made: France appointed a special envoy to IMEC; Saudi Arabia committed an investment of $20 billion to develop the corridor; and India and the UAE signed a Framework Agreement on IMEC. 

Countering China’s modern ‘Silk Route’

Experts say the new corridor is the brainchild of India and the US, with both being worried over China’s increasing influence in Asia and Africa and IMEC is an alternative to China’s Belt and Road Initiative (BRI), which started in 2013 to link over 150 countries in Asia, Africa and Central Europe by developing six land corridors linked by road, rail, energy, digital infrastructure and a network of ‘Maritime Silk Road’ linking ports.

“IMEC looks like a greater achievement for public diplomacy than its promise to increase economic and transport connectivity. For India, joining IMEC allowed it to project the image that it is playing a substantial role in an initiative serving as a counterpoint to the BRI, particularly the BRI-funded China–Pakistan Economic Corridor,” wrote Hasan Alhasan,  Senior Fellow for Middle East Policy; and Viraj Solanki, Research Fellow for South and Central Asian Defence, Strategy and Diplomacy at the  International Institute for Strategic Studies (IISS), in an online analysis ‘Obstacles to the India–Middle East–Europe Economic Corridor’. They also note that already many country-linking infrastructure initiatives were going on in the Middle East for decades and IMEC includes some components of it.

Saving time and freight charges

Experts say the new IMEC route will reduce sea freight time from India to Europe by 40%, which now generally takes between four to six weeks, depending on the port of destination. At present, most of the India-Europe maritime cargo travels through the Suez Canal, a 193-km-long artificial canal built nearly 150 years ago connecting the Mediterranean Sea to the Gulf of Suez in the Red Sea. The Suez Canal, the Strait of Malacca in Southeast Asia and the Strait of Hormuz in the Arabian Gulf are among the busiest sea freight routes in the world. The IMEC will be an alternative, saving time and costs. “The Red Sea is one of the major arteries of global trade, accounting for an estimated 30% of container volumes and 12% of international trade,” says an Observer Research Foundation (ORF) report on IMEC.

Indian companies are already making the move. Haifa port in Israel is now owned by Adani. In July 2022, a consortium of Adani Ports and SEZ Ltd (APSEZ) and Israel’s chemical major Gadot Group won the tender to privatise the Haifa port in a $1.18 billion deal. Adani owns 70% and Gadot has the remaining equity in the port, and they have a concession period up to 2054. Located in northern Israel, Haifa is one of Israel’s two biggest commercial ports, handling nearly half of the country’s container cargo and is also a principal port for passenger traffic and cruise ships. 

Green hydrogen, data, and renewables

The IMEC is also going to benefit corporates like Reliance Industries, the Adani Group, ACME Group, AM Green, L&T, Avaada, and ReNew, which are in the process of developing green hydrogen projects and derivatives like ammonia and methanol. India aims to tap at least 10% of the global projected market demand of over 100 metric million tonnes (MMT) of green hydrogen and its derivatives like green ammonia and methanol by 2030. The production capacity targeted by 2030 is likely to attract over ₹8 lakh crore in total investments and create over 600,000 new jobs. Besides catering to domestic decarbonisation efforts, the country also wants to export about 10 MMT by 2030. European countries like Germany and France are likely to be the major buyers of ammonia and methanol made in India, likely to be at the cheapest price in the world.

ORF researchers note that the inclusion of electricity grids in the corridor framework is also particularly significant from an Indian perspective. “As part of its leadership of the International Solar Alliance, India has already promoted the ‘One Sun, One World, One Grid’ initiative, an ambitious attempt to connect the world’s vital regional grids into a common green grid that can transfer renewable energy from one region to another. It would leverage different time zones to maximise the use of solar power and reduce the need for expensive energy storage systems,” they say.

IMEC is also going to boost the digital infrastructure and connectivity from India to the Middle East and Europe, in telecommunication and data transfer, including the development of a digital banking infrastructure, say experts.