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.

“Uzbekistan is holding consultations with Iran and Turkey on how to make the most of the Southern Corridor’s potential, in both bilateral and multilateral formats,” she said adding “this topic was thoroughly discussed at a ministerial meeting between Uzbekistan, Iran and Turkey during the second Transport Ministers’ meeting of Organization of Islamic Cooperation (OIC) member states in Istanbul.”

This builds on regular meetings between the heads of the railway administrations of China, Kazakhstan, Uzbekistan, Turkmenistan, Iran, and Turkiye, where the discussions are serious, detailed and commercial. “At the inaugural meeting in Tehran in May 2025, a preliminary agreement establishing uniform transport tariffs along the Southern Railway Corridor, as well as measures to increase freight volumes, including standardized delivery times and simplified procedures,” Umarova said.

Moving things forward via a coordinating body.

What Umarova believes is needed now is a coordinating body to keep up the pace of developments. “This is necessary in order to consolidate the efforts of stakeholders when addressing a wide range of legal, economic and technical issues,” she said – although there is a debate about what format this would take.

“In the case of the Southern Corridor, I believe that an intergovernmental coordinating structure would be most appropriate. As I mentioned previously, Uzbekistan has taken the lead in establishing the Council for the Integration of Railway Spaces of SCO Countries. The participating countries will most likely be represented by the heads of relevant ministries or agencies,” she added.

Big gains for infrastructure and trade.

What is at stake is a huge new piece of infrastructure as well as the movement of huge amounts of cargo. The potential capacity of the Southern Corridor between Central Asia and the EU is estimated at 10 million tons per year, Umarova told RailFreight.

That number could rise by 50% to 15 million tons per year when the electrification and construction of additional track segments along the 1,000-kilometre railway section from Sarakhs on the Turkmenistan border to Razi on the Turkish border is completed, added Umarova. This is a joint project between Iran and China, she further added.

Many challenges ahead

Like many experts Umarova is not blind to the many challenges the Southern Corridor faces to become a reality and supplies a lengthy list of them headed by differences in technical standards. “Iranian railways operate on a 1435 mm gauge, whereas Central Asian countries use a 1520 mm gauge. This necessitates the replacement of bogies (rearranging wagons) at border crossings, which incurs additional costs for freight transport along the route,” she said. Other issues mentioned were the lack of integration between the Iranian and Central Asian railway spaces, lack of unified transportation documentation, lack of tools for harmonizing rolling stock and transportation processes and sanctions against Iran.

Bottlenecks

But the geography of the route is also a problem and not just its length. “The main bottleneck of the Southern Corridor is currently the need to transfer cargo across Lake Van in Turkey,” said Umarova. This prevents the corridor from being entirely rail-based and explains the decision to construct the Marand–Cheshmeh Soraya railway line in Iran, with an extension to the Turkish border region of Aralık. On top of this she noted some sections of Iran’s railways are single-track and require electrification. Investment is needed to address these issues but pointed out these issues are being addressed through cooperation with China and Turkmenistan.

Costs will be huge

All this has a huge price tag made more difficult by the sanctions imposed on one of the principal countries Iran whose every move is seemingly overshadowed by another barrage of sanctions. “However, private and foreign investment (including from Turkey, China, India and some Gulf countries) is being attracted in some cases, particularly in the development of transit routes,” said Umarova.

Iran’s key role

In 2025, Iran’s Ministry of Roads and Urban Development announced plans to create nine transit railway corridors at an estimated cost of over 10 billion USD, to be financed by a percentage of oil sales, said Umarova. What is striking is some of these projects are linked to Afghanistan, including the Five Nations Railway Corridor (Iran-Afghanistan-Tajikistan-Kyrgyzstan-China).

In 2020, Iran completed the first three stages of the Khaf–Herat railway with the final section scheduled to open in 2026. Construction of a 1435 mm gauge railway between the Afghan cities of Herat and Mazar-i-Sharif has also been announced. “Iran is ready to allocate an unprecedented sum of 2,5 billion USD for these projects,” said Umarova.