For centuries, traders sailed with ease carrying goods from Kerala’s coast to and from Arab lands, thanks to the consistent monsoon winds. South-West monsoon and retreating monsoon winds were integral parts of the sailing schedules of hundreds of ships laden with spices (Cinnamon, cardamom, turmeric, ginger), gems, ivory, and muslin. Arab traders carried this precious cargo onwards on camel-backs to Europe and made hefty profits. On the way back, these ships brought olive oil, Roman wine, and gold coins to India, popularly known as ‘Sone ki chidiya’. India enjoyed leadership and a favorable balance of trade for a long time. This was the ancient Spice Route.
On the sidelines of a recent G20 meeting, we saw the announcement of the modern spice route, aka India Middle East Europe Economic Corridor (IMEEEC). It aims to boost connectivity and trade, joining India to Saudi Arabia and thereon to Europe. Significant signatories to this proposal are the UAE, Saudi Arabia, France, the EU, the USA, and Germany.
IMEE EC will consist of two separate corridors – the Eastern Corridor, connecting India to West Asia/Middle East, and the Northern Corridor, connecting West Asia/Middle East to Europe.
This is a multi-modal transport corridor – Ships will sail from JNPT/ Mundra/ Kandla to Jebel Ali (UAE). Etihad Rail will take the goods to Al Ghwefat (Saudi border). The existing high-speed freight train network then takes the containers to Al Haditha on the Saudi-Jordan border. Rail tracks from here up to Haifa port (Israel) are the ‘missing link’ currently. From Haifa, the goods will travel by ship to Piraeus (Greece) and thereon by land to the rest of Europe.
What is the driver for this corridor? Why now?
The pandemic and the subsequent geopolitical disturbance due to the Ukraine- Russia war have hugely affected the economics of trade, and strategic alliances amongst nations. Blockage of the Suez Canal in March ’21 showed us how vulnerable our supply chains are. We felt the need for an alternative route to reach Europe. This corridor provides a 40% faster movement.
To reduce dependence on China for raw materials and finished goods, most large corporations embrace the China+1 Policy. This is indeed an opportunity for India, which now has a singular focus on promoting local manufacturing. Towards its own west, India is landlocked with volatile relationships/governments in Pakistan and Afghanistan. IMEE EC provides India with a faster, stronger, direct route to the Middle East and Europe.
Saudi Arabia and UAE have ambitious 2030 economic goals in the post-oil era. This necessitates building stronger partnerships with the big economies of Europe and India. Europe’s interest is to reduce dependence on Russia (after the war). US interest is to create an alternative to China’s BRI (Belt and Road Initiative) to maintain (read retain) the balance of world power.
China’s BRI reminds me of the white horse from the Awhwamedh Yagya ceremony (ancient India). A new king would let loose a white horse to wander across lands of other kingdoms. Any state that does not accept the leadership of the new king will have to fight with the cavalry accompanying the white horse. The intention is to prove undisputed leadership on territories.
BRI – a Chinese government-funded program with the clear objective of providing easy & stable market access to the large manufacturing capacities of China – has drawn much criticism for leaving many states indebted and losing ownership of assets (port/ road) to China.
This is an abridged version of the SCM Spotlight segment that was published in the October issue of Logistics Insider magazine. To read the complete version, please click here.