The India-Middle East-Europe Corridor (IMEC), announced in September 2023, aims to significantly reduce transit time and costs between India and Europe via the Middle East. While the eastern leg connecting India and the UAE shows progress with increased bilateral trade and the launch of a Virtual Trade Corridor, the western leg faces hurdles due to the ongoing Israel-Palestine conflict.
The economic relationship between India and the UAE is flourishing, with bilateral trade growing significantly after the signing of the Comprehensive Economic Partnership Agreement (CEPA) in 2022. This growth includes diversification into non-oil trade, which will further benefit from IMEC.
The Israel-Palestine conflict significantly impacts the western leg's progress. Saudi Arabia and Jordan, key stakeholders, are unable to advance due to the geopolitical sensitivities involved.
India should prioritize improving its ports, developing economic zones, and enhancing domestic logistics for seamless IMEC integration. Improving the digital footprint in logistics is also key to making Indian exports more competitive. Furthermore, establishing an IMEC secretariat can help organize the project and encourage other countries to participate.
Currently, only the connectivity aspect of IMEC is gaining traction. Other elements such as clean energy and undersea cables will have to wait for a resolution of the West Asia conflict. The eastern part of the corridor should focus on strengthening connectivity while the western part navigates the geopolitical complexities.