IMEC’s Relevance To India and Its Chokepoints

The announcement of the India-Middle East–Europe Economic Corridor (IMEC) in 2023 was interpreted as a counterweight to China’s Belt and Road Initiative (BRI). However, for India, it is less about rivalry and more about connectivity and economic security, as diversifying trade routes connecting India and the EU can help mitigate the traditional Red Sea-Suez Canal route’s susceptibility to geopolitical and logistical problems.

Despite the EU being among India’s top three trading partners, accounting for over 12 per cent of merchandise trade, the trade movement relies overwhelmingly on the Red Sea-Suez Canal route.

In March 2021, a massive container ship blocked the narrow Suez stretch, keeping hundreds of vessels stranded, disrupting around 12 per cent of global trade. More recently, Houthi attacks on commercial shipping led to the Red Sea crisis of 2023-24, forcing major carriers to reroute vessels around the Cape of Good Hope. This led to an additional distance of 3,500 nautical miles, extending transit times by a week, increasing fuel costs and insurance premiums, creating uncertainty in delivery schedules, and forcing Indian exporters to hold back a significant share of shipments.

A massive container ship blocked the narrow Suez stretch, keeping hundreds of vessels stranded, disrupting around 12 per cent of global trade.

Given this, IMEC, for India, can emerge as a risk-management strategy through maritime artery diversification.

An Economic Insurance

Fundamentally, IMEC’s value lies not in replacing the Suez or the North-South corridor (through Russia), but in bringing about diversification in the portfolio of India-EU trade route connectivity by combining maritime transport, high-speed rail, and integrated port networks linking India to the Gulf and onward to Europe.

An associated estimated reduction in transit times by up to 40 per cent and of logistics costs by around 30 per cent implies faster turnaround and lower working capital cycles for Indian exporters. For India’s west coast ports, this promises higher throughput, deeper integration with Gulf and Mediterranean logistics ecosystems, and alignment with the government’s policies with Gati Shakti, Sagarmala, and bringing down logistics costs to global benchmarks.

Thus, the Indian ambition to move up the global value chain from low-margin assembly to higher-value manufacturing and services is supported through a triangular economic structure: India as a manufacturing and services base, the Gulf as a logistics and capital hub, and Europe as a source of technology, standards, and demand.

The IMEC, thus, envisages an interlinked value chain, where the factor market in India gets connected to the product market in the EU through logistic intermediation in the Middle East.

Yet, the chokepoints emerge from geopolitical tensions, logistical constraints and financing gaps. The conflict in the Gaza Strip created impediments for quite some time, despite the present ceasefire.

Unless Haifa’s port capacity is substantially expanded, IMEC cannot realistically serve as a large-scale alternative to the Red Sea-Suez Canal corridor, where Egyptian ports together handle nearly 180 million tonnes of cargo annually.

Logistical chokepoints emerge from infrastructure deficits and port capacity mismatches. While IMEC envisages cargo movement from Indian ports such as Mumbai or Mundra to Jebel Ali in the UAE, and onward by rail through the UAE and Saudi Arabia to Israel’s Haifa port, key railway links along this route are still incomplete.

Again, while Jebel Ali can handle around 90 million tonnes annually, Haifa’s capacity is limited to about 30 million tonnes, creating a significant bottleneck. Unless Haifa’s port capacity is substantially expanded, IMEC cannot realistically serve as a large-scale alternative to the Red Sea-Suez Canal corridor, where Egyptian ports together handle nearly 180 million tonnes of cargo annually.

The real test of IMEC lies in its financing. Large cross-border corridors often falter when financing structures fail to account for political risk, regulatory diversity, and long gestation periods. IMEC spans regions with uneven fiscal capacities and credit profiles, making traditional public funding or stand-alone public–private partnerships insufficient. IMEC requires a portfolio approach to financing — combining public investment, multilateral guarantees, sovereign wealth capital, and private investment — that can lower the capital cost and attract long-term institutional investments.

This commentary originally appeared in The Hindu Business Line.

• Developing and Emerging Economies
• European Union
• India
• Middle East
• corridor financing
• economic security
• geopolitical chokepoints
• Gulf logistics hub
• imec
• India–EU trade
• logistics cost reduction
• multimodal connectivity
• Red Sea–Suez Canal risk
• trade route diversification
• transit time reduction

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