INSTC in focus: faster, cheaper logistics for Russia–India trade
Logistics are becoming an increasingly important factor in competitiveness for companies engaged in Russia—India trade. The North—South International Transport Corridor (INSTC) offers a rational solution to this challenge—shorter routes, predictable deadlines, and a noticeable reduction in costs. The development of INSTC infrastructure, and the growth in cargo traffic volumes demonstrate that the transport corridor is reaching the phase of mature commercial operations.
What is the INSTC?
The North—South Corridor (INSTC) is becoming a key route for Russian—Indian trade, combining sea and land routes into a single multi-mode network. This corridor connects western India with Russia via Iran, while the eastern branch of the route is considered the most convenient for transportation volumes and geographical coverage.
Structurally, the corridor consists of an extensive network of ports, railways, and logistics hubs. One of the main routes passes through Kazakhstan and Turkmenistan to the Iranian port of Bandar Abbas. The trans-Caspian route is another operational option, passing through the Russian ports of Astrakhan, Olya and Makhachkala, as well as the Iranian ports of Bandar Anzeli, Amirabad and Noushehr. There is also a plan to create a route through Armenia, as well as proposals for integration with the Northern Sea Route (NSR). The signing of an agreement on construction of the Rasht—Astara railway section will complete the western branch of the corridor through Azerbaijan.
INSTC map
Source: Special Eurasia
Key INSTC figures and metrics
The corridor is approximately 7,200 km in length. In 2024, the traffic volume along the corridor increased by around 19% and reached approximately 26.9 million tonnes, of which over 12.9 million tonnes was transported by rail. According to forecasts, the corridor’s eastern route will be able to transport around 8 million tonnes of coal per year by 2040, while the overall target for the western branch is to reach around 15 million tonnes per year in the coming years.
Why the INSTC is important for Russia and India
The flexibility of logistics provided for by the North—South corridor enables Russia and India to diversify supplies, reducing dependence on traditional routes and expanding the range of goods traded. India is increasing exports along the corridor in order to reduce its substantial trade deficit with Russia. The structure of Indian exports to Russia includes construction materials, clothing and footwear, rice, plastics, confectionery and seasonings. Meanwhile, Russia supplies India with paper products, lumber, furniture, roofing materials, and food products.
The economic efficiency of the route has been established based on experience. The net cost of services via the eastern branch decreased last year by over 56%, while traffic volume increased by 70%.
The parties are actively developing port infrastructure. Strengthening relations with Iran, India has signed a 10-year agreement for the development and operation of the port of Chabahar, a vital trade artery connecting India with the countries of Central Asia. Meanwhile, Russia is increasing its presence within Iranian ports on the Caspian Sea.
The rate of the corridor’s growth is impressive—in 2024, the volume of INSTC traffic increased by 19% and amounted to 26.9 million tonnes. Trade between India and Russia via the corridor has doubled over the past year. Travel time along the route has been significantly reduced. Today, train services from Moscow region to Bandar Abbas take around 16 days, which is three times faster than two to three years ago.
Alexander Sharov
General Director of Neftekhimtrans LLC
Over the past two years, the exact fees for use of the INSTC have decreased by 30–50%, while delivery times have been reduced by 40–60%. Shipments from the Urals region to the Iranian port of Bandar Abbas are delivered in just 9 days. Ports that are involved in the routes in Russia and Iran are being extensively upgraded, and have very large idle capacities. The complete provision of all necessary equipment and premises at the ports is only a matter of time—these are purely technical matters that will be resolved soon. However, even without taking into account the upgrade works, the Caspian and Eastern routes are able to increase their traffic volumes three-fold in their current condition.
Challenges and difficulties of INSTC development
Despite its growing importance, the project faces serious external challenges, primarily of a geo-economic nature. There are difficulties with calculations, as well as with insurance and attracting foreign investment.
To address settlement challenges in Russia—India trade, Sber offers a letter of credit discounting solution via its Indian subsidiary, helping exporters and importers improve liquidity and mitigate payment risks in cross-border transactions.
Infrastructure problems also require solutions. Modernisation works are needed for the corridor to function fully, especially in Iran, which requires significant additional investment and close coordination between all participating countries.
Furthermore, the project is also competing with other international transport corridors, which means that participants must build balanced foreign policies.
Prospects for INSTC development
Multilateral mechanisms are being employed to accelerate the development of the North—South corridor and address the challenges ahead. Working groups have been established, while investment and industry forums like the Kazan Forum are held regularly, during which new projects are presented and infrastructural and legal aspects of trade are discussed. New participants are getting involved in efforts, including Kazakhstan and Azerbaijan, and integration within major international organisations including the SCO and BRICS are creating additional opportunities for coordination.
Investment studies indicate that the eastern branch of the corridor, which is already showing high traffic volumes, requires relatively low CAPEX when compared to other routes. Top priority projects for the eastern branch require financing of about $1.1 billion, which makes the corridor attractive from an economic standpoint. This builds a foundation for attracting joint investments from participating States, as well as private investors focused on the long-term development of a sustainable logistics artery.