A fireside chat on the India-Middle East-Europe Economic Corridor: Reshaping Trade & Connectivity
Rtn. Manjeet Kripalani, co-founder of Gateway House
Thank you all. It’s a pleasure to be here at the Rotary Club as a speaker. Thank you, Rina, for finding a way to accommodate us this year, and especially, Satyan.
We are here to discuss a significant geopolitical project that is originating in India and is a game changer for us both domestically and internationally. This is of relevance to those of you who are in business and finance and who are looking to expand internationally.
It’s the India-Middle East-Europe Economic Corridor, or IMEC — an 8,000 km roadway, railway, and ship-rail transit network connecting India with the Gulf region and onward to Europe via Jordan and Israel. It was announced at the G20 summit in New Delhi in 2023. This is India’s first multilateral infrastructure project and we, in Mumbai, are the originator port — a particularly sweet global positioning for our city.
To tell you more about it, may I please introduce two scholars from Gateway House who have studied this brand new futuristic project from multiple dimensions — Amit Bandari, our Senior Fellow for Energy, Investment, and Connectivity, and Sifra Lenton, the Bombay History Fellow.
Before we hand over to these two scholars, I would like to introduce Gateway House to you. Some of you know it but to reiterate, Gateway House is a foreign policy think tank started in Mumbai by two women. We conduct research on India’s foreign policy for the public and for our members. We convene special meetings and study trips to geopolitical hotspots.
We are established as a non-profit under Section 8 of the Companies Act and are compliant for funding under CSR for the promotion of education and protection of natural heritage, art, and culture — a little bit like the Rotary Club. We’ve also just received our CFFCR certification, which is a sign of our government’s confidence in our work.
Amit Bhandari, Senior Fellow for Energy, Investment, and Connectivity
OK, so our talk today is going to cover the India-Middle East-Europe Economic Corridor. We are going to get an overview of what this corridor envisages in terms of infrastructure, its larger vision, what it seeks to do, and also how this corridor is probably going to reshape the region as well as the economies that are participating in it.
So, before we move ahead, what exactly is IMEC? We, of course, know what it stands for, but it was first proposed in 2023 as a multimodal, multinational corridor connecting India with Europe via the Middle East. This corridor envisages a host of different types of connectivity.
The first and most obvious is maritime connectivity, which is largely already there. However, IMEC seeks to upgrade the existing connectivity substantially — first from India to the Middle East and then from Haifa in Israel to Europe. The second part is rail connectivity, which starts from Jebel Ali in Dubai, a place all of us are familiar with, and extends all the way via Saudi Arabia to Israel, passing through Jordan. Some railway lines already exist, but many will need to be constructed in the coming years and decades.
IMEC will also morph over time. Our research indicates that it will transform into an energy corridor with energy infrastructure, including oil pipelines, green hydrogen pipelines, and related facilities. More importantly, it will also serve as a conduit for data — following the adage that “data is the new oil.” In fact, data may be even more critical than oil, as its absence will be felt almost immediately.
IMEC was proposed during India’s G20 presidency, which was perhaps the biggest stage India has been on globally in a very long time. This underscores the importance of this initiative from the Indian perspective. Apart from India, other participants include the European Union, Saudi Arabia, Israel, and the United Arab Emirates. These countries will all lie along the corridor. Most importantly, the United States, which is not a physical part of the corridor, has also signed on to it and expressed a strong desire to be involved. This signifies that the world’s larger democratic, free-market, open economies are either part of IMEC or want to be — a key point of difference from China’s Belt and Road Initiative, which we will discuss later.
IMEC also mirrors historic trade routes. My colleague Sifra will go into more detail, but to provide some perspective, India already has substantial trade relationships with countries along this corridor. India’s annual trade with the European Union is approximately $125 billion, comprising $75 billion in exports and $50 billion in imports. With the UAE, India has over $80 billion in bilateral trade, and with Saudi Arabia, another $40 billion. These are already significant figures, and they are expected to grow as India’s economy expands, as India integrates into global trade agreements, and as IMEC’s infrastructure enhances connectivity.
Now, let’s get into the details. IMEC, in its present form, originates from four key ports in India: Mundra, Kandla, JNPT (Jawaharlal Nehru Port Trust) in Mumbai, and the second port being developed by JNPT — Vadhavan. I will take a moment to talk about Vadhavan because it is the linchpin of this infrastructure. Vadhavan will be an artificial island near Palghar dredged from the sea, and will become India’s largest port capable of handling ultra-large container ships. These massive vessels can carry 15,000 to 20,000 twenty-foot containers. At present, very few Indian ports can accommodate such ships. In contrast, many of the world’s ultra-large container ports are in China, where much of global trade originates, or in Europe and the US, where Chinese goods are received. Two important transshipment hubs — Singapore and Dubai, also handle these ships; IMEC’s rising trade volume and improved infrastructure will enable larger ships to operate, increasing cargo capacity and reducing logistics costs over time.
The first leg of IMEC’s connectivity runs from India to the Middle East. Ships already operate on this route, but the key objective is to expand capacity. Instead of relying on smaller feeder vessels, the goal is to deploy 20,000 capacity container ships on this route. Once these ships reach Jebel Ali or other ports in the Persian Gulf region, their cargo will be offloaded and transported by rail to Haifa.
One common concern about IMEC is that rail transport is more expensive than shipping, and this is a valid point. However, rail transport offers advantages that shipping cannot provide. First, land routes are less vulnerable to disruptions. For example, the war in Yemen has forced significant Red Sea cargo to be rerouted around the Cape of Good Hope. Other potential geopolitical disruptions could arise as well. Second, the land route is much faster. When transporting perishable goods, time-sensitive cargo, or high-value items, businesses cannot afford to wait 30 days for shipment by sea. Instead, they need a more efficient and reliable transportation alternative, which IMEC will provide.
So, this is where the value comes in. Now, from these Persian Gulf and Arabian Sea ports, the cargo goes all the way to Haifa, and this is where a big buildup is supposed to happen. Haifa Port currently handles about 1.5 million containers a year, whereas Jebel Ali, on the Persian Gulf side, handles 15 million. So Haifa Port will require a substantial upgrade in capacity.
So far, Haifa Port has been limited because of Israel’s diplomatic relations with its neighbours, but those are clearly improving. Many in Saudi Arabia would not have signed off on IMEC knowing that Israel is on the other side unless they were expecting a change. One of the port terminals in Haifa is being developed by Adani Group, which has actually taken on projects of national significance outside of India.
Two examples that come to mind are the Colombo Port Terminal and the electricity deal with Bangladesh. The Adani Group has, in the past, participated in projects that may not make immediate financial sense but align with long-term national interests. I think that is another prism through which we need to look at IMEC.
At this point in time, the second part of the Arabian Peninsula does not have a railway line, and they are planning to build one. Haifa Port is the one that needs to be upgraded. Finally, from Haifa, there are three or four ports in southern Europe that will be the receiving end for IMEC. Piraeus in Greece is one, Marseille in France is another, and a number of other ports — possibly including some in Italy — may also be part of IMEC.
Finally, the ending point is expected to be northern Germany because that is the largest European economy and a key hub where many trading networks terminate.
Sifra Lenton, author and fellow at Bombay History Studies
Hi, everyone. I think Amit has done the tough job. My intervention is actually about the history — it’s a bit of a compressed version.
The India-Middle East Economic Corridor is nothing new in India’s trading history and heritage. In January this year, just a few months ago, I wrote an article on the old IMEC, a precursor to the new corridor. What I discovered during my research was that the old IMEC corridor preceded the Red Sea, which is better known today as the Suez Canal route, by a good 2,000 years. The Red Sea route became a popular trunk route for maritime trade — part maritime, part land — only by the 1st century CE.
Now, I’m going to explain how the IMEC regions evolved. The Persian IMEC region constitutes an underexplored historical route.
I have taken the year 2300 BCE as a key point. Some of you may be aware of the Fertile Crescent, which stretches from the Tigris and Euphrates Rivers across West Asia to the eastern Mediterranean coast. In 2300 BCE, there was a Mesopotamian king named Sargon. He ruled a northern kingdom that extended to the eastern Mediterranean shores — what is now Israel, Lebanon, and Syria.
Sargon integrated the southern port cities of the Tigris and Euphrates river which sat at the head of the Persian Gulf with his northern kingdom, effectively linking the Persian Gulf region with the eastern Mediterranean. During this time, India’s Indus Valley Civilisation — which was at its peak — was not only trading with Mesopotamia but also sending goods as far as Egypt, the eastern Mediterranean regions of Greece and Rome, and even North Africa.
The second important aspect is how these ancient realities align with what Amit has discussed about the Arabian Peninsula. This historical trade route passed through present-day Iraq, which is now a key part of IMEC.
One must understand that trade routes — whether the old Silk Road which, incidentally, is newer than this one, or others — functioned as networks of traders. Trade routes operated like water, always taking the easiest path. Whenever political, security, or economic problems arose, or when kingdoms declined, trade routes shifted accordingly.
In ancient times, the Arabian Peninsula’s eastern littoral (the Persian Gulf coastline) had two key trading regions. One was Dilmun, which included present-day Saudi Arabia, Bahrain, and Qatar. The other was Magan, located near the Strait of Hormuz, modern-day southern Iran and Oman. Traders from these regions acted as intermediaries between Indian trade and the Mediterranean trade. Essentially, they connected the upper sea (Mediterranean) and the lower sea (Arabian Sea) — exactly what IMEC is designed to do today.
What did these traders deal in? They carried goods like spices, pepper, cloth, and cotton. Some Egyptian mummies have been found wrapped in dyed cloth from Gujarat, proving the extensive trade networks of the time. They also carried goods from the Mediterranean side to India. We have evidence of this trade from Indus Valley seals found in Mesopotamian sites, as well as Mesopotamian seals found in Indus Valley sites.
Finally, I want to make this history relatable to our everyday lives. If you look at Judaic and Christian traditions, you might recall the well-known nativity scene of baby Jesus lying in a manger with the Three Magi (also known as the Three Wise Men or Three Kings). What did they bring as gifts? Gold, frankincense, and myrrh.
Frankincense and myrrh were both highly valuable incenses sourced from the Incense Route, represented by the small footprints on the Arabian Peninsula in the map. Historical accounts suggest that frankincense and myrrh were even burned in Saudi Arabia in those ancient times. That’s just a small historical insight I wanted to add.
Amit
So now that we know what IMEC is and where it comes from, given its historical background, why does it really matter?
At a very geopolitical level — this is a point I also briefly covered earlier — it signals a closer alignment between India and the US. The US is not physically a part of this corridor, and yet it chooses to endorse it, which signals a closer alignment between the two countries.
We have been hearing about China’s Belt and Road Initiative (BRI) for over a decade now. BRI has been an initiative to create a China-centric global trading network. It has caused financial problems in many of the countries that signed on for Chinese projects. In this region, we have seen that Pakistan, Sri Lanka, and Bangladesh are all facing varying levels of financial troubles because of infrastructure investments.
IMEC is not like that. IMEC is a partnership of equals. So, if I’m Bangladesh dealing with China, the equation is going to be completely different when compared to having the EU, Saudi Arabia, and India coming together. These are all financially vibrant economies — either growing or already very rich — and therefore, the corridor is going to be driven by commerce.
And finally, one point that I covered earlier — there is already a large volume of trade happening along the IMEC route, and it offers an alternative to the Red Sea-Suez Canal route, which has proven vulnerable to disruptions in multiple ways. You will, of course, remember the famous instance where a ship got stuck in the Suez Canal. More recently, we have seen the Houthis attacking shipping, which has resulted in around 60% of the Suez Canal traffic being redirected around the Cape of Good Hope, adding about 20 days to shipping time and increasing associated costs.
So, IMEC signals a closer alignment between India and the US and also offers an alternative to BRI. At this point in time, there are a number of encouraging signs for IMEC. For example, while there is no rail connectivity between Haifa and Jebel Ali at this moment, the United Arab Emirates already has a large rail network, completed in the last few years. This network predates IMEC but aligns well with what has been proposed.
The southern part of Saudi Arabia does not have a rail network in place yet, but Saudi Arabia has a long-term 2030 transportation plan. This plan envisions upgrades to its ports on the Red Sea and the construction of a railway network from the UAE border all the way to Jordan and beyond. Now, a railway to Jordan alone would not make sense unless the rail line extends further. Jordan itself does not absorb a lot of goods, so clearly, Saudi Arabia is planning for this network to go beyond. Moreover, Saudi Arabia has announced it will be spending $20 billion to upgrade its infrastructure specifically for IMEC.
So, while IMEC may be currently stuck due to the conflict in Gaza, Saudi Arabia clearly anticipates that this conflict will subside, relations with Israel will normalise, and the whole project will eventually take off.
Additionally, Greece, which is at the European end of IMEC, has also been trying to attract Indian investment in its port sector in recent years.
Since IMEC is positioned as an alternative to BRI, we can compare some key points between the two routes. A significant portion of China’s exports to Europe go via maritime routes, but a growing share is now using railway lines.
In fact, China has built railway lines up to its borders with Kazakhstan and Russia, utilising existing rail networks to transport goods all the way to Europe. These railway lines take approximately two weeks to move cargo from China to Europe, compared to 45-50 days for shipping, if not more. While railway transport is more costly and requires subsidies, it has facilitated the movement of around 2 million containers annually from China to Europe. A portion of this cargo is absorbed within Russia and Kazakhstan, while about 500,000 containers reach Europe. You know that old saying: If you build it, they will come. That seems to apply here.
In the India-Europe scenario, there is already a substantial volume of trade. The railway line will provide an alternative to the existing route, which is currently impacted by conflict, thereby adding more value.
If you compare this to the long route around Africa, IMEC will save even more time — potentially three to four weeks. IMEC, in a way, provides an alternative to BRI. While the participating countries do not explicitly frame it as a geopolitical contest, this aspect will undoubtedly play a role.
Earlier, I spoke about Saudi Arabia eventually looking at normalising its ties with Israel. Many factors need to align for IMEC to truly fructify. Currently, Saudi Arabia and Israel do not have diplomatic relations. The expectation was that these two countries would normalise ties following the Abraham Accords, which the UAE has already signed. However, Saudi-Israel normalisation is currently affected by the Gaza conflict. Still, as seen in the $20 billion investment Saudi Arabia has allocated for infrastructure and its broader strategic planning, the country clearly envisions this corridor becoming a reality.
Saudi Arabia’s new leadership is decisive. They aim to transform the Kingdom — economically and socially — and IMEC is part of that vision.
India already has a very strong relationship with the UAE, one of its largest trading partners. It also has strategic ties with Israel and the US. This is reflected in the I2U2 grouping, an economic cooperation initiative focussed on areas such as water, transport, and infrastructure — all of which are central to IMEC.
The final point is India’s rising trade profile. Over the past 20 years, India’s economy has grown significantly. From being a marginal player in the global economy, India has become much larger and more central. Over the next 20 years, we will likely see India emerge as a major pillar of the world economy with an even greater share in global trade.
To support that, India will need a stronger infrastructure base — precisely where IMEC comes in.
So, what’s next for us?
At this moment, IMEC is still in the concept stage. However, when it becomes fully operational, it is expected to cut down the shipping time between India and Europe by about 40% compared to the Suez Canal route. If we compare it to the Cape of Good Hope route, the time savings will be even greater. But more importantly, IMEC helps protect trade between India and Europe.
Currently, any shipping from India to the Gulf or Europe must pass through either the Red Sea or the Persian Gulf — both of which are contested waters prone to conflict.
I was born in 1979, and I think that is the year of the Iranian Revolution. I think we have been hearing about Iran blocking the Strait of Hormuz in good years once a year and in bad years three or four times a year. But this is another persistent threat — it’s not going to go away.
Likewise, the Red Sea has the Houthis in Yemen on one side and Egypt, which is one of the less stable countries in West Asia, on the other. So that route, too, is vulnerable to disruption. IMEC transforms this trade from these two conflicted bodies of water to the Arabian Sea and the Mediterranean Sea, which are two open, protected, controlled bodies of water.
The Indian Navy is a security provider in the Arabian Sea, and European navies keep the Mediterranean secured from the disruptions we have seen elsewhere. So, the protection of trade — enabling it in times of uncertainty — is itself a huge deal as well. Instead of the shaky Red Sea route, goods will be transported through the stable Arabian Peninsula.
So, what will IMEC carry?
I think the first and most obvious answer is that it will carry container traffic from India to Europe, particularly high-value and perishable cargo. This is a point we already covered earlier. If my goods are going to spend 10 or 12 days on the road versus 30 days, as it is at present, that is a substantial saving. It enables certain kinds of trade that were not possible earlier, especially for time-sensitive cargo.
The second part of IMEC is going to be the transportation of energy from West Asia to India. I already made the point about the Red Sea and the Persian Gulf being unstable bodies of water. Historically, Saudi Arabia has exported its oil via terminals on the Red Sea, which have been under Iranian threat since the 1979.
In the last 20-odd years, Saudi Arabia has tried to reduce this risk by shifting some of its oil export infrastructure away from the Red Sea. Now, it finds that the Red Sea route is also prone to blocking. So, in the longer term, the ideal strategy for Saudi Arabia would be to extend pipelines to the Mediterranean Sea for European markets and to the Arabian Sea via the United Arab Emirates for Asian markets, including India, China, and Japan.
These terminals will be less vulnerable to disruptions, whether by Iran or its controlled elements. Now, you cannot start a major initiative by saying that you are going to reduce your vulnerability to a bad actor because you might provoke them into action. So, this is a dimension of IMEC that is not often talked about.
IMEC is also, of course, going to be a conduit for data, and this is something we should look at in some detail.
I mentioned earlier that data is a crucial part of the modern economy. Today, India’s biggest export is actually IT services, which bring in about $250 billion a year. All of this flows through optical fibre cables that run along the world’s oceans.
You can think of this as a network of optical fibre cables: from the European Union to the U.S., from the Pacific coast of the U.S. to Japan and China, from China to India, and from India to Europe via the Suez Canal. Practically 80-90% of the data traffic from India to Europe passes through cables along this route.
Last year, in the second half of the year, there were reports that optical fibre cables in northern Europe had been damaged by a Chinese ship. The ship did nothing more than drag its anchor along the seabed, but it cut the cables, disrupting internet traffic in several North European countries.
We have already seen that the Houthis are willing to fire actual missiles and drones at merchant ships. If they could find a way to interrupt data traffic, would they be willing to do it? I think the willingness is definitely not in question — it is their ability that is currently limiting them.
In the case of shipping, if there is a threat, I can at least reroute the ships around the Cape of Good Hope, albeit at some cost and delay. But an optical fibre cable takes two or three years to be laid after it has been signed off. You cannot divert data that easily. The vulnerability of data is far greater than the vulnerability of goods.
We are used to thinking in physical terms — containers, oil shipments — but it is data that will hurt us much faster and on a much larger scale if disrupted.
One of the long-term visions of IMEC is to lay an optical fibre cable from the Arabian Sea, across Saudi Arabia, toward Israel, and from there to Europe. This cable would pass through stable, protected territories of some of the most stable countries in the region and the world.
This would make it less prone to disruption. Diversification itself provides a great deal of protection—if we are not dependent on a single series of cables passing through the same choke point, we have already substantially reduced our vulnerability.
All in all, IMEC aims to protect global traffic in data, commerce, and energy from conflicts in this economically crucial region.
Look at all the conflict zones: Yemen, the Strait of Hormuz, the conflict in Gaza, which is hoped to calm down substantially, Syria, where ISIS still exists and where there has been a recent regime change, and the conflict between Turkey, Azerbaijan, and Armenia.
With all these conflicts in the region, IMEC is really an effort to bypass them. The initiative is led by countries at both ends—India and the European Union—as well as those in the middle, such as Saudi Arabia and the UAE.
If Saudi Arabia wants to remain an oil exporter for the next 40, 50, or even 100 years, it needs to protect these exports against disruptions from hostile elements. IMEC is the way they plan to do it.
Finally, IMEC illustrates how India’s partnerships are evolving in line with its changing economic and political stature. As India expands, it seeks new partnerships.
Historically, in the 1970s and 80s, India was identified with the Non-Aligned Movement. We were a very proud member of that group. But in recent years, things have shifted. The NAM is pretty much on the back burner.
India is now forging partnerships in South Asia, East Asia, and beyond. For instance, India is working as part of the BIMSTEC group, which includes countries in the Bay of Bengal region, to strengthen economic ties. We already have energy trade agreements with Bhutan, Nepal, and Bangladesh, and there are proposals to integrate Sri Lanka into a South Asian power grid.
Likewise, India’s financial connectivity through UPI is already available in Bhutan, Nepal, the UAE, and Oman. IMEC should also be seen in this context. As India grows and expands its global footprint, it will forge new partnerships.
As India regains its former economic heft—many of you may have seen that old chart showing that in 1580, India accounted for one-third or one-fourth of global GDP—it is bound to have a much larger role in global trade. IMEC is part of that transformation.
Thank you for your very patient listening.
ROTARIANS ASK
Do you have any numbers on what the cost of the project is and how it will be financed?
So, there are multiple legs of IMEC. There is the Vadhavan port, which will be developed over multiple phases in the next 20-odd years. I have seen multiple estimates, but $10 billion for the first phase seems to be the most realistic. In India, over the last 20-25 years, most major infrastructure investments—whether ports or airports—have been privately funded. I think Vadhavan is also going to be developed privately.
On the side front, the railway line is a major piece of infrastructure that they want to build. In their case, money is not an object at all. In fact, they have a very ambitious plan to upgrade all their ports in the Persian Gulf, as well as their railway network, which currently covers only part of the country. This will be funded entirely within Saudi Arabia.
Haifa Port has two terminals. One of them is operated—I should use the word “operated”—by the Adani Group, but the owner, of course, is the Israeli government. The second terminal has a Chinese operator. Haifa Port will require substantial upgrades, and I believe the operator is responsible for bringing in the capital. Since Haifa Port already exists, there is no need for dredging. The cost will likely be less than Vadhavan Port, probably in the range of $4 to $5 billion, but again, this is a multi-year investment. I think, if we consider the post-Gaza conflict period and look at the developments over the next ten years—counting all the bits of infrastructure—the total investment would range between $75 billion and $100 billion, including ports and terminals.
You mentioned that when IMEC was conceived, the U.S. was supportive of it. Do you see that changing in the post-Trump era?
No, I think IMEC will continue to be a priority for the U.S. One of the things we have seen during the Trump administration was their stance towards China. They continued to perceive China as an adversary, much more so than the preceding administration. The rhetoric about China being an unfair trader and restricting its market partly reflects that stance. Regarding India, apart from specific trade issues like tariffs, the general stance has been supportive. If IMEC helps reduce key allies’ dependence on the Chinese economy and manufacturing, my sense is that it would continue to have American support.
ROTARIANS ASK
Do you have any numbers on what the cost of the project is and how it will be financed?
So, there are multiple legs of IMEC. There is the Vadhavan port, which will be developed over multiple phases in the next 20-odd years. I have seen multiple estimates, but $10 billion for the first phase seems to be the most realistic. In India, over the last 20-25 years, most major infrastructure investments—whether ports or airports—have been privately funded. I think Vadhavan is also going to be developed privately.
On the side front, the railway line is a major piece of infrastructure that they want to build. In their case, money is not an object at all. In fact, they have a very ambitious plan to upgrade all their ports in the Persian Gulf, as well as their railway network, which currently covers only part of the country. This will be funded entirely within Saudi Arabia.
Haifa Port has two terminals. One of them is operated—I should use the word “operated”—by the Adani Group, but the owner, of course, is the Israeli government. The second terminal has a Chinese operator. Haifa Port will require substantial upgrades, and I believe the operator is responsible for bringing in the capital. Since Haifa Port already exists, there is no need for dredging. The cost will likely be less than Vadhavan Port, probably in the range of $4 to $5 billion, but again, this is a multi-year investment. I think, if we consider the post-Gaza conflict period and look at the developments over the next ten years—counting all the bits of infrastructure—the total investment would range between $75 billion and $100 billion, including ports and terminals.
You mentioned that when IMEC was conceived, the U.S. was supportive of it. Do you see that changing in the post-Trump era?
No, I think IMEC will continue to be a priority for the U.S. One of the things we have seen during the Trump administration was their stance towards China. They continued to perceive China as an adversary, much more so than the preceding administration. The rhetoric about China being an unfair trader and restricting its market partly reflects that stance. Regarding India, apart from specific trade issues like tariffs, the general stance has been supportive. If IMEC helps reduce key allies’ dependence on the Chinese economy and manufacturing, my sense is that it would continue to have American support.
I want to play devil’s advocate here. BRI is supposed to be completed by 2049, and IMEC is still at the ideation stage. Given China’s track record of execution, why would I go for IMEC when I know China will get things done?
BRI has two issues. First, many countries that joined BRI were already struggling economically. Those that aggressively pursued Chinese projects were often in a financial bind and saw Chinese capital as “free capital.” But we’ve seen Sri Lanka default on its debt—much of it tied to BRI. Pakistan, home to a major BRI corridor, is practically in default. Bangladesh has seen political instability partly due to financial distress linked to BRI loans. Historically, BRI has not worked well for host economies.
Second, in the last five or six years, China’s outbound FDI has slowed significantly due to economic and political factors. The investment flowing into BRI has dropped, and I don’t expect it to scale much beyond where it is now.
In contrast, IMEC involves market-driven economies—India, the EU, Saudi Arabia, and the UAE. These economies are strong, commercially motivated, and not inclined to invest in vanity projects. IMEC is likely to be more viable than BRI.
Following up on Satyan’s question—who will build this corridor? Right now, the Chinese have the best technology and AI in the world. Who will take on this construction?
Let’s go back about 20-25 years. When India conceived the National Highway project—the North-South and East-West corridors, and the Golden Quadrilateral—Indian companies initially lacked the capacity to build them. The first contracts were joint ventures with Malaysian companies, but by 2005-06, Indian firms were handling most of the projects independently. By 2008-09, over 30-40 Indian companies were capable of bidding for large highway contracts. Similarly, as IMEC projects begin, capacity will develop. I don’t think India will involve China in building key infrastructure. A port, for example, could be disrupted through malware—something we’ve seen at JNPT before. Critical infrastructure like this will likely avoid Chinese contractors, just as most Western nations now restrict Chinese telecom equipment.
Manjeet: The whole point of this corridor is to be the anti-BRI corridor. China is coming nowhere close to it.
Related question—what public or private sector entities are currently active in IMEC? You mentioned some earlier, but who are the corporations or institutions involved in implementation?
Right now, due to the Gaza conflict, no formal agreements have been signed. But some key names will certainly be involved. Construction firms like L&T will be at the forefront. Port operators will play a big role—JNPT is part of IMEC, as is Vadhavan. Private port operators like the Adani Group will be involved.
Suppliers of port and railway equipment will be key players. Etihad Rail operates the UAE’s railway network, which will need to be extended through Saudi Arabia. DP World, which runs Jebel Ali Port and owns ports in Europe, will also be a major player.
Other key companies include Siemens and Alstom, which have supplied metro rail networks in India and are likely to be involved in IMEC’s railway construction.
Is one of the U.S.’s objectives in IMEC to strengthen the U.S. dollar, like how India is trying to strengthen the rupee?
The U.S. dollar is the safest global currency. In China, even billionaires don’t have security—Jack Ma disappeared for a year. Investors prefer keeping assets in dollars over Chinese yuan. The European economy has lost ground, and the euro has weakened. The Indian rupee is improving but still loses 5-6% annually due to inflation.
Unless the U.S. makes major missteps, the dollar will remain central. IMEC reinforces that position by keeping the U.S. actively involved in global trade initiatives.