India is searching for alternative routes, bypassing the war blocked Black Sea route, to send its annual US$4.5 billion-worth exports to the Commonwealth of Independent States (CIS) amid western sanctions and various trade obstacles.
The Asian country is planning to use Iran’s Chabahar port as the best option to send the cargo to CIS members like Russia, Ukraine, Azerbaijan, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, and Uzbekistan.
Indian exports to the CIS countries had been growing continuously during the last couple of years and until January of this fiscal year, they grew by 24% year-on-year.
Additionally, India plans to ship cargoes through China’s Qingdao port on the Yellow Sea and from there by rail to their CIS destinations, and also exports by using the Georgia port.
In Chabahar port, India has been developing two terminals, which it would run for 10 years. Thus, officials and traders believe that the port is the best option. The Chabahar port was on Indian focus for a long period to ship its merchandise to CIS bypassing China and Europe as it would help New Delhi to cut its logistics cost by a fifth in container transportation.
Before the Russian invasion of Ukraine, which created severe disruptions in goods transportation, India had two options, either to use China or European ports to send cargo to CIS countries.
The Chabahar port is located in the Sistan-Balochistan province of Iran, where India has easy access from its western coast. The port also has an exemption from American sanctions despite being an Iranian establishment.
Immediately after invading Ukraine, the Russian soldiers have blocked many nearby shipping routes which include parts of the Black Sea and the Sea of Azov. Many ships, which entered the areas, become captive and fail to come out from there as Russian forces reportedly have created barriers of mines.
A Bangladeshi vessel has already been hit by a Russian missile sustaining severe damage and also a ship crew was killed in the incident. Many crew members of the ships stuck in the Black Sea and the Sea of Azov have abandoned vessels after the incident to avoid life risks.
Thus during this wartime, Indian export-import trade with CIS members was severely disrupted, and traders are looking for suitable vessels to ship goods, while freight rates increased significantly amid fuel price hikes globally.
The removal of Russian banks from the SWIFT messaging service by the western nations, as part of broader sanctions, have also created complications to continue trade with Russia, forcing the Indian government to think about Rupee-Ruble transaction instead of US dollar.
Indian micro, small and medium enterprises have already sought freight subsidies from the government for the time being to support their export-import trade.
Sharar Nayel
Asia Correspondent
