Armenia’s innovative proposal for a new trade corridor could transform India’s global trade strategy

Armenia has proposed a new trade corridor to connect Indian traders with Russia and Europe, bypassing Azerbaijan. The Persian Gulf-Black Sea corridor, which will run parallel to the International North-South Transport Corridor (INSTC), aims to connect Mumbai with Bandar Abbas in Iran and then Armenia, onward to Europe or Russia. This proposal was made by a visiting Armenian team comprising senior officials and experts, while Armenia’s foreign minister Ararat Mirzoyan was also visiting India.

Armenia, whose ties with India have strengthened in recent years, has sought Indian investments for the corridor in the Armenian territory. The corridor will provide an additional trade route for India to reach Europe, circumventing the Suez Canal and avoiding the negative impact of Russia-West confrontation.

The INSTC, which connects Mumbai with Russia via Iran and the Caspian Sea, has been instrumental in increasing India’s trade with Russia since the Russia-Ukraine war began. Azerbaijan is a key element of INSTC, but its slow progress in completing an infrastructure link under INSTC has prompted Armenia to propose the Persian Gulf-Black Sea corridor. Armenia shares strong political and business ties with Iran, making it an ideal partner for the new trade corridor.

The proposed corridor may connect Iran with Georgia via either Armenia or Azerbaijan, as both countries have railway and highway connections with Georgia. However, there is a missing link of some 165 km inside Iran (the Rasht-Astara line) to connect Azerbaijani and Iranian railways. In January 2023, Russia and Iran agreed to launch the construction with Russian funding. Azerbaijan also has a highway connection with Iran.

The new trade corridor fits well into India’s plans as it seeks additional routes to reach Europe, avoiding the Suez Canal and the risks associated with Russia-West confrontation. The corridor will provide a safer alternative for international logistic and insurance companies to transport cargo to Russia and Europe. All potential participants of the project, including Iran, Armenia, Georgia, Azerbaijan, Bulgaria, and Greece, have expressed their interest in participating.

Given the extensive experience of Indian companies in taking part in large-scale infrastructure projects abroad, Armenia plans to start negotiations with India to discuss the involvement of Indian funding and Indian companies in the project. Armenia has witnessed strong economic growth in the region, despite the ongoing war. This new trade corridor could boost Armenia’s economic growth further and strengthen its ties with India.

Armenia’s proposed Persian Gulf-Black Sea corridor has the potential to become a game-changer for trade between India, Russia, and Europe. The new trade route aims to connect Mumbai with Bandar Abbas in Iran and then Armenia, onward to Europe or Russia, bypassing Azerbaijan.

The proposal was made during a visit by a delegation of senior Armenian officials and experts to India, where Armenia’s foreign minister Ararat Mirzoyan was also present. The visit highlights the growing ties between the two countries, particularly in the field of defense exports.

The International North-South Transport Corridor (INSTC), which connects Mumbai with Russia via Iran and the Caspian Sea, has been instrumental in increasing India’s trade with Russia since the Russia-Ukraine war began. However, Azerbaijan’s slow progress in completing an infrastructure link under INSTC has prompted Armenia to propose the Persian Gulf-Black Sea corridor.

Armenia’s proposal is well-timed, given the ongoing tensions between Russia and the West, which have disrupted economic and political relations. Large-scale transit of cargo passing the Russia-Europe border is now seen as too risky by international logistics and insurance companies owing to the ongoing sanctions on Russia.