India, USA, Saudi Arabia, UAE, European Union, Italy, France, and Germany have inked an MoU for the landmark IMEC project that comprises an eastern corridor connecting India to the Gulf region and a northern corridor connecting the Gulf region to Europe. These corridors will provide 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 to, from, and between India, UAE, Saudi Arabia, Jordan, Israel, and Europe. Along the railway route, there is a plan for laying cables for electricity and digital connectivity and pipes for export of cleaner hydrogen. The corridor will secure regional supply chains, increase efficiencies, and reduce costs, and, in turn, enhancing trade accessibility and facilitation.
IMEC and Partnership for Global Infrastructure & Investment (PGII), a development initiative aimed at countering China’s Belt & Road Initiative (BRI) and narrowing the infrastructure gap in developing countries, is aimed at unlocking greater investment for infrastructure devel- opment and strengthening connectivity and economic integration.
IMEC is being seen as a network of transport corridors, including railway lines and sea lanes, spurring economic growth and integrating Asia, the Arabian Gulf, and Europe. Experts believe that the cost of IMEC routes could be between USD 3 billion to USD 8 billion. This could immensely benefit the ports and railways sectors. As part of IMEC, three Indian ports have been shortlisted. Among the Indian ports that could be connected on the West Coast of India are Mundra and Kandla in Gujarat and Jawaharlal Nehru Port Trust in Navi Mumbai. Five ports in the UAE and Saudi Arabia including Fujairah, Jebel Ali, Abudhabi, Dammam, and Ras Al Khair have been shortlisted to be connected to the Indian ports.
The onward rail connectivity from five ports in UAE and Saudi Arabia stretching up to Haifa port in Israel, will be a mix of the already existing Brownfield projects and fresh Greenfield projects to connect the missing links. There is a missing stretch between Qurayyat in Saudi Arabia and Beit She’an in Israel, which will have to be constructed. Similarly, a missing link between Ghweifat on the Saudi border and Haradh has to be constructed. Of the total rail route length of 2915 km, stretching from Fujairah to Haifa, there are missing portions of 1095 km with work in progress in 536 km while construction needs to be done in 559 km. Another 2449 km route from Abu Dhabi to Haifa has a 629 km stretch which needs to be linked. On the fourth 2149 km long route of Dammam port to Haifa via Haradh, 289 km is yet to be constructed. In the rail route from Ras Al Khair port to Haifa passing through Buraydah, 269 km of the total 1809 km is yet to be linked.
The rail sector experts foresee big gains for rail and port infrastructure companies like IRCON, RVNL (Rail Vikas Nigam Limited), Tata Projects, L&T, GMR, etc. This is clearly evident from the fact that with the mere announcement of IMEC, stocks of companies like IRCON, RVNL, and IRFC have shot up by 10-20% on the National Stock Exchange. Experts from railways industry opine that India’s vast experience in handling large rail projects including high speed rail corridor, Metro rail, and dedicated freight corridor projects will stand in good stead for Indian railway companies to secure projects from IMEC; especially, as China, with its expertise in building rail infrastructure, is out of the picture.
Says Santhosh Kumar, Vice Chairman, Anarock Group, “The IMEC would involve developing new infrastructure like roads, railways, ports, pipelines etc, to improve transportation links between the regions. This presents a major business opportunity for Indian infrastructure and construction companies to get contracts to build new roads, rail lines, ports etc along the corridor route, which would bring in large revenues and drive growth of the construction sector.”
The IMEC could open up faster and better connectivity to Europe via Saudi Arabia for Indian exports. This trade boost, as per Kumar, will necessitate upgrading logistics infra like warehouses, cold storage, etc. Indian construction firms could also gain from developing industrial clusters, special economic zones, logistics parks, etc along the corridor route as investment increases. Kumar also expects scope for Indian companies to gain maintenance and operations contracts for running the newly built infrastructure. Further, the economic boost to the corridor could spur construction activity and infrastructure investment in cities and regions linked to the corridor in India.
Angad Bedi, Managing Director, BCD Group, says that the international economic corridor is going to fast-track development with infrastructure as a focal point. “This corridor will facilitate a smooth exchange of expertise and knowledge, thus boosting both the ongoing and upcoming infrastructure projects. Saudi Arabia’s expertise in architectural marvels can help Indian companies scale up fast. Similarly, we can leverage Europe’s meticulous planning, operational excellence, and tech-enabled innovative practices in construction, creating more opportunities for the segment.”
Besides IMEC, India is also pitching for speedier operationalisation of new transport corridors such as the Northern Sea Route and the Eastern Maritime Corridor between Vladivostok (Russia) and Chennai in India. According to Sarbananda Sonowal, Union Minister for Ports, Shipping & Waterways, the new corridors to Europe and Russia that originate in India, will greatly benefit India.
Global players are now recognising India’s potential as a maritime country and are also interested in tapping the huge Indian market. This is clearly evident from the recent Global India Maritime Summit which is expected to attract investments worth Rs 10 lakh crore. The Port sector is likely to get a big funding boost. Besides massive funding through port upgradation programme of the Modi government, additional investment through IMEC is expected to upgrade Indian ports. The upcoming Vadhavan deep draft mega port is one such major capacity enhancement initiative which will create an all-weather deep draft capability port for handling cape size and ultra large cargo carriers. Also, since end-to-end multimodal logistics service providers, transhipment hubs and warehousing facilities will be put in place by the member countries of IMEC, these will open up immense opportunities for India in the field of logistics and warehousing.
In a related move, the Indian government is going for policy reforms to attract global funding for infrastructure. The agreement among UK-India Infrastructure Financing Bridge, City of London Corporation and Niti Aayog has already been signed. London is the world’s second largest financial service centre with trillion of dollars of investible funds. India is looking to work closely with the City of London to develop a number of infrastructure projects in the field of renewable energy, national highways, and railway projects. Discussions are also being held with Saudi Arabian and Australian authorities to seek active exposure of their sovereign wealth, pension and insurance funds to Indian projects. On its part, India has shown willingness to address the concerns of big global investors on the Indian agreements, besides creating investible and bankable projects to attract global capital. All these developments will pave the way for putting infrastructure and construction sector on a fast track.