A new multi-modal commercial corridor is emerging that could radically transform trade flows between the Indian Ocean Region, the Middle East, and Europe. This India-to-Europe Arab-Mediterranean (Arab-Med) Corridor forms an arc of connectivity spanning the southern rim of Eurasia from India's west coast to the eastern Mediterranean coast of Greece. It has the potential to reconfigure Eurasia's connectivity architecture and India's role in the global economic order.
The catalyst for this corridor is the 2020 normalization of relations between the UAE and Israel, enabling the creation of a railway network from the UAE through Saudi Arabia and Jordan to Israel's Mediterranean port of Haifa. Combined with the maritime link from Haifa to the port of Piraeus in Greece, Indian goods shipped through UAE ports could reach Europe in 10 days - a 40% time savings versus the Suez Canal route. The Arab-Med Corridor provides an alternative to the troubled International North-South Transit Corridor (INSTC) project centered on Iran's Chabahar port.
Whether India becomes a leader in this emerging architecture depends on developing manufacturing value chains within the corridor. India's partnerships with Arab states and Israel to create food and energy corridors provide models for further integration. Multilateral joint ventures in green technologies also hold great promise. India's strategic imperative is to facilitate investment partnerships that anchor its position through expanded manufacturing in the corridor.
UAE Connectivity: Gateway for India's Arab-Med Corridor
Robust India-UAE ties are the foundation for the Arab-Med Corridor. UAE ports will serve as the Indian Ocean gateway. The 2017 Comprehensive Strategic Partnership (CSP) set goals to boost bilateral trade by 60% and attract $75 billion in mutual infrastructure investment.
In 2018, UAE's DP World formed a $3 billion joint platform with India's National Infrastructure Investment Fund (NIIF) focused on ports and logistics. DP World is developing an integrated transportation system linking its Jawaharlal Nehru Port operations and new Nhava Sheva Business Park FTZ to support corridor integration.
The UAE's Indian community is also crucial, comprising one-third of the UAE's population. The UAE-India Business Leaders Forum formed a $1 billion fund in 2017 for Indian infrastructure projects advancing the food corridor.
India's Food Corridor to the Middle East
Food processing is the centrepiece of current Arab-Med integration, meeting the Arab Gulf states' food security needs while increasing the value of Indian production. The multi-billion dollar 'India-Middle East Food Corridor' project was launched in 2017. The UAE coordinates investments from various entities totalling up to $7 billion.
India's partnership with Israel is pivotal, providing agriculture and water management technologies to boost India's yield. This has resulted in joint manufacturing ventures in India, such as a solar-powered irrigation systems plant. Saudi Arabia is also committed to the food corridor through entities like the Saudi Agriculture and Livestock Investment Company.
Multilateral cooperation in food production and auxiliary manufacturing should be expanded as a strategic priority.
Integrating Petrochemicals Manufacturing
India, the UAE and Saudi Arabia are also cooperating to develop an integrated hydrocarbon value chain and petrochemicals manufacturing base in India. The UAE's ADNOC and Saudi Aramco are jointly investing $44 billion in a new refinery and petrochemicals complex in Maharashtra. Saudi Arabia is playing a lead role through entities like SABIC, which is investing in Reliance Industries' oil-to-chemicals transition.
India should coordinate multilateral efforts to manufacture advanced thermoplastics and other materials to supply corridor electric vehicle production.
The Innovation Corridor: Green Energy and Technology Manufacturing
Innovative technologies, especially in renewable energy, offer the greatest potential for future Arab-Med integration. India's partnerships with Israel and the UAE in sectors like artificial intelligence demonstrate the possibility for commercial synergies and joint ventures across the corridor.
Greece's emergence as a leader in green tech also holds promise. Greece, India and their Gulf partners should facilitate investments and partnerships in solar power, electric vehicles, batteries and charging infrastructure. Multilateral collaborations can build on progress in bilateral relationships, such as India and Israel's joint research on next-generation solar panels and EV batteries.
India can also leverage opportunities related to Saudi Arabia's $500 billion Neom megacity project and green energy innovation in the UAE and Israel. A corridor-wide framework to incentivize multilateral partnerships is needed to drive integration.
India possesses the geography and demographics to become a Eurasian economic powerhouse. However, it must develop advanced manufacturing value chains anchored in the Arab-Med Corridor. Success will depend on interlocking partnerships and strategic coordination of investment by India and its eastern Arabian and Mediterranean partners. Joint ventures in food production, petrochemicals, green energy and emerging technologies can cement India's integral role in a new trans-regional commercial architecture spanning the Indian Ocean to the Mediterranean.
This strategic shift can anchor India as a leader in 21st century Eurasian connectivity, securing its interests in the changing global economic landscape.
So what happened to INSTC (International North-South Transport Corridor) through Iran's Chabahar
India has lacked robust overland connectivity to Central Asia and Europe, leading it to explore alternate routes. The main existing option is the International North-South Transport Corridor (INSTC) centered on Iran's Chabahar port. The INSTC seeks to establish a multimodal corridor from India through Iran and Afghanistan to Central Asia and Russia. However, the INSTC has faced multiple delays and roadblocks in becoming fully operational.
The Arab-Med Corridor would provide similar connectivity but with several advantages. Instead of sanctions-hit Iran, it transits politically stable Gulf states. The maritime transit is shorter via Arabian Sea ports compared to Chabahar. Rail transit times to Europe could be as little as 10 days versus over 20 days currently from Mumbai. Costs are estimated to be reduced by 40% for India-Europe trade.
Additionally, the Arab-Med Corridor has greater potential for manufacturing integration because of synergies between India's partnerships with the UAE, Saudi Arabia and Israel. Major investments are already underway in food processing and petrochemicals. The INSTC passes through regions with limited economic ties to India currently. Joint ventures seem more feasible across the Arab-Med Corridor in sectors like electric vehicles, batteries, solar panels etc.
Can this be a feasible alternative to China's formidable trillion dollar Belt and Road Initiative
Launched in 2013, China's BRI seeks to build infrastructure connecting China to Europe, Africa, and beyond. It consists of overland "Silk Road" corridors through Central Asia and a "Maritime Silk Road" of port projects across the Indian Ocean.
BRI has funded over $1 trillion in projects so far spanning highways, railways, ports, pipelines, and power plants. It covers around 140 countries encompassing over 60% of the world's population. The massive scope is both a key strength and weakness.
On the one hand, BRI provides emerging economies access to infrastructure financing often unavailable elsewhere. It has expanded China's influence and trade reach.
On the other hand, many BRI projects suffer from lack of transparency, corruption, and unsustainable debt burdens for host nations. As Sri Lanka and Pakistan have experienced, inability to repay Chinese loans can lead countries to forfeit strategic assets.
Amid economic slowdowns, debt crises, and pushback from recipients, China is being forced to overhaul BRI by improving project quality over quantity. However, fundamental issues around its unilateral approach and unfair loan terms remain.
Arab-Med Corridor: Multilateral and Synergy-Driven
In contrast, India's Arab-Med Corridor adopts a more collaborative approach relying on India's partnerships with the UAE, Saudi Arabia, Israel and Greece.
It capitalizes on existing synergies like food production between India and the Gulf states enabled by Israeli agriculture technology transfers. The corridor builds on current petrochemical investments in India by UAE and Saudi firms.
Rather than single-handed Chinese loans, the Arab-Med Corridor utilizes co-investments between entities like India's NIIF, UAE's DP World, and Saudi Arabia's PIF. Multilateral partnerships in green energy and tech innovation are also envisioned.
While still conceptual, this corridor focuses more on manufacturing integration versus just infrastructure connectivity. Joint ventures could produce components for solar energy, electric vehicles, batteries, and other high-tech sectors.
Advantages and Outlook
For recipient countries, the Arab-Med Corridor's emphasis on multilateralism provides some advantages over BRI's unilateral approach. Joint ventures give more equitable risk-and-return sharing versus Chinese loans. Multilateral transparency and governance may be better.
India can leverage its ties with Gulf states and Israel to provide an alternative source of infrastructure financing for nations concerned about overreliance on China. Japanese investment could be tapped too.
However, the Arab-Med Corridor lacks BRI's established funding mechanisms like the Asian Infrastructure Investment Bank. Execution risks remain in integrating disparate partnerships into concrete projects.
Much depends on proactive Indian diplomacy to turn synergies into joint investments. While promising on paper, the Arab-Med Corridor requires concerted action to materialize.
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