We have addressed virtually all previously outstanding issues, including land registration and obtaining benefits,” Tsivilyov said on the sidelines of an intergovernmental commission. “It is very complex, but we managed to resolve all the implementation issues. We can confidently say that as of April 1, we will begin the implementation phase of this large-scale infrastructure project,” he added.

Iran giving strong support to INSTC

Iranian President Masoud Pezeshkian has committed to removing all obstacles hindering the development of the INSTC by the end of March. “Relations between Iran and Russia are robust, with numerous agreements being signed and actively implemented,” Pezeshkian said. “We aim to eliminate remaining barriers by the end of the (Iranian) year so that the railway route can be completed and become operational,” he added.

Iran’s role does bring challenges.

Iran is important to North South Corridor but there are some concerns its political stance both internationally and domestically is a problem. Led by a hard line Muslim Islamic establishment it has backed many of the rebellions in the Middle East and has incurred the strong disapproval of moderate Muslim states, the West and the United States, who maintains two battleship groups in the Indian Ocean in order to bomb Iran.

Domestically a worsening economy triggered huge demonstrations across the country which were brutally crushed in January leading to widespread concerns about the stability of the regime. “Tensions between Iran and the US, particularly Trump’s policy of reimposing ‘maximum pressure’ on Iran, undoubtedly increase the risks associated with using Iranian transit routes.

Furthermore destabilisation of the domestic political situation could lead to higher insurance costs for cargo transport,” Nargiza Umarova, Head of the Center for Strategic Connectivity at the Institute for Advanced International Studies, University of World Economy and Diplomacy, Uzbekistan told RailFreight.com.

Where is the money going to come from?

One other big problem for the Corridor is finance. Iran whilst it has oil has an economy which is severely sanctioned – the consequence of years of supporting Islamic rebels and attempting to have its own nuclear weapons. “Sanctions and their tightening remain a significant constraint. Last year, for example, Washington took steps to reinstate sanctions against Iran’s only ocean port, Chabahar, which is included in many interregional transport projects. Only India, which is investing in the port’s modernization, was granted a six-month deferral that expires in April 2026,” added Umarova.

Her view is INSTC does not harm Iran’s transit capacity, but rather contributes to its expansion — especially given the increased practical significance of the project for Russia. “Following international sanctions imposed on Russia for its invasion of Ukraine, the country is reorienting its exports of raw materials towards the South Asian market. This trend has breathed new life into the INSTC,” she told RailFreight. “In 2024, for example, the volume of cargo transported along the eastern branch of this corridor, via direct rail links between Kazakhstan, Turkmenistan and Iran, nearly tripled compared to 2023, reaching 2 million tonnes”, Umarova added.

IMEC now more challenged

This is all adding to the difficulties facing IMEC the India-Middle East Corridor which India’s Prime Minister Narendra Modi announced at the September 2023 G20 Summit in New Delhi amidst broad excitement which has now gone. Not only is the IMEC route too close to both the Houthi’s in the Red Sea and the Israel-Arab War but some feel Iran’s Revolutionary Guards – who control much of Iran’s logistic industry – have a vested interest in egging the conflicts on.

“If IMEC became the standard trade route, not only Iran but also the Islamic Revolutionary Guard Corps itself stood to lose. If the Bab el-Mandab (the entrance to the Red Sea and prime Houthi territory) remained too risky or expensive to transit, Iran hoped to profit as an alternative transit route,” said Michael Rubin director of policy analysis at the Middle East Forum and a senior fellow at the American Enterprise Institute in FirstPost.com. On top of this Saudi Arabia, the effective Middle East part of IMEC, is now changing its foreign policy and pivoting towards Pakistan and possibly Turkey in what some have dubbed “the Islamic Nato,” – something that would be difficult for India.

Etihad Rail will get priority clearance with customs systems, giving the operator a competitive advantage on the line. The corridor will be implemented across free zones, transit shipments, exports, and the domestic movement of goods between the Emirates of Abu Dhabi and Fujairah, says Etihad Rail.

Pilot operations are supposed to start in Q4 2025, and there are plans to extend the initiative to more locations. The UAE is hoping that the streamlined corridor will improve the country’s position as a global trade and logistics hub.

Indian manufacturing

Rail freight consultant Xavier Wanderpepen points to changing freight flows as underpinning the Emirati effort. Countries across the broader Gulf region have decided to invest in infrastructure, because they could benefit from low-cost manufacturing moving out of China.

“Their thinking is that China is gradually reducing its role in low-cost manufacturing, moving away from shoes, clothes, and toys, and shifting toward higher-value industries such as electric vehicles and advanced technology”, Wanderpepen explains. “The production of low-cost consumer goods is already shifting to Vietnam and Cambodia, and is expected to expand significantly in India over the next decade”, he adds.

Within that context, countries in the Middle East could position themselves as a central hub along the India – Middle East – Europe Corridor (IMEC). “Over the next 10–20 years, they aim to become a logistics hub for India, which is expected to emerge as the ‘new workshop of the world’”, says Wanderpepen. “The Emirates in particular want to establish multiple platforms and solutions to capture that role.”

Some of the most important reasons concerned the stagnation of infrastructure projects along the INSTC, slowing down its development, tension between Iran and India regarding the development of the Chabahar port, and, of course, the emergence of a new transport project in which India had a prominent role–the IMEC.

Since its announcement at the G20 Summit in 2023, the IMEC has been widely criticised. One prominent point of criticism concerned its merely geopolitical character, which lacks aspirations for economic integration between the parties involved and a vision for shared investments.

Experts have warned that the project is quite frail since it relies on cooperation between countries whose relations are not the best possible and that it will fail to pose serious competition to China’s BRI or the Russian-led INSTC.

India turns again to Iran and Russia

The ongoing and spreading Middle East crisis confirms those concerns. India is now turning again towards Iran and Russia to explore possibilities of Eurasian transportation. According to Indian media, the three states have been intensively discussing the situation in Gaza and the Red Sea and putting the INSTC at the forefront of alternative shipping solutions.

In fact, the ongoing war has affirmed the importance of INTC for India, which, together with Iran, is already attempting to revive the project. The two states reached an agreement to create a “joint transportation committee to expand cooperation between the two countries and activate the transit capacity and use of the INSTC”.

The Indian Foreign Minister, S. Jaishankar, also expressed “India’s readiness to carry out transport investments in Iran”. Moreover, the two parties have found a new formula for operating the Chabahar port, a critical INSTC hub. A new, ten-year agreement has been signed giving India access to the management of the port’s Shahid Beheshti terminal. The new agreement opens the way for Indian investments, which have been hindered by the short annual management contracts signed until recently.

The US had the project in the works for some time as it had been unofficially discussing the matter with its partners since last spring. Initially, the plan did not seem to have the potential to unfold into an official project involving major governments while raising geopolitical stakes in the region. Even after its official announcement, it was faced with fierce criticism by many who said it would never be able to counteract China’s Belt and Road Initiative. Supposing IMEC’s implementation meets expectations even to the slightest degree, it will inevitably evolve into a major trade and economic corridor linking large economies way faster than before while also making railway transport integral in this connectivity.

In any case, this is not an analysis of whether the IMEC will work, whether it will balance Chinese influence in global infrastructure investments or whether it will become a new Silk Road. Like any other major transport and infrastructure project, IMEC will not be assessed based on its conceptual framework but on its practical implementation and the palpable results it will produce. In this sense, every little step matters, and the steps currently taken by the countries involved concern mapping out the corridor’s hubs.

Major ports on the agenda

As mentioned before, all countries involved in this new project have something to win out of it. For instance, India’s prime minister Narendra Modi said that it could become the basis of future world trade. Consequently, it also makes sense for those countries to attempt to include critical transport and economic infrastructure in the corridor. India is already considering linking three major western ports in the maritime leg of the IMEC, including the Jawaharlal Nehru port, the Deendayal port, and the Mundra port.

On the other hand, the Jebel Ali, Mina Zayed, and Fujairah ports in the United Arab Emirates will function as the sea shipping connection points between India and the Arabian peninsula and as gateways for the cargo to enter the corridor’s rail leg crossing UAE, Saudi Arabia and Jordan before reaching the port of Haifa in Israel.

From the port of Haifa, the corridor will continue via sea to the Greek port of Piraeus, which will function as IMEC’s European gateway. What will happen to cargo from there on is still unclear since Piraeus could dispatch shipments to other Mediterranean ports or put cargo on rail on the way to Central Europe.

Also read: Can there be an India-Middle East-Europe corridor without Turkey?

Railway infrastructure still loading

Port infrastructure is undoubtedly critical for the IMEC; however, the same applies to rail. The main idea is that rail will be deployed through the UAE, Saudi Arabia, Jordan and Israel. The UAE have made strides recently regarding their state-of-the-art railway network, which is complete and connects all major points within the country.

Most importantly, the UAE network has already reached the border with Saudi Arabia, meaning that the only thing remaining is launching a project to link it with the neighbouring country’s central railway grid. Simultaneously, Saudia Arabia’s main north-south line, extending from Riyad to the border with Jordan, could potentially serve IMEC’s traffic. The line’s extension within Jordan has already been projected as well. However, another insight that November’s talks will provide concerns whether the IMEC will utilise existing railway infrastructure or invest in new. Considering that UAE’s network is entirely new, maybe the idea would be to invest mainly in Saudi Arabia, Jordan and Israel.

Something else that should be clarified concerns what happens after cargo reaches Piraeus from Haifa. If a rail option is in the plans, the Greek railway network should also be subject to similar and robust investments to facilitate traffic. In this case, it will be interesting to see how synergies between all those partners unfold and whether they will prove their doubters true.