India joining Ashgabat Agreement

P.Stobdan

India recently joined the Ashgabat Agreement, which was instituted in April 2011 to establish an international multimodal transport and transit corridor between Central Asia and the Persian Gulf. The Agreement was first signed by Uzbekistan, Turkmenistan, Iran, Oman and Qatar on 25 April 2011. While Qatar subsequently withdrew from the agreement in 2013, Kazakhstan and Pakistan joined the grouping in 2016.

Ashgabat Agreement came into force in April 2016. Its objective is to enhance connectivity within the Eurasian region and synchronize it with other regional transport corridors, including the International North–South Transport Corridor (INSTC). At its first meeting held in March 2017, the Working Committee of the Ashgabat grouping discussed operational issues, including details of the routes through participating countries. Parties submitted a number of proposals to the Depository State (Turkmenistan) to be considered for approval by the Coordinating Committee.

The Coordinating Committee has a list of road and rail routes that are part of a single transport transit corridor within the framework of the Ashgabat Agreement. Among other things, the regional transport grouping is considering measures to create a “green” corridor for vehicles to reduce the time spent at railway checkpoints for replacing wheel sets, create favourable conditions and effective schemes for storing and handling cargo, and use of berths of sea ports. In order to increase the attractiveness of the routes as well as the volume of transit cargo, the group considered the issue of having a unified tariff for transit goods by rail.

On March 23, 2016, India had formally conveyed its interest in acceding to the Ashgabat Agreement. On February 1, 2018, Turkmenistan, as the Depository State of the Ashgabat Agreement, informed India ‘that all the four founding members have consented to the accession of India (to the agreement).” India will now provide information to the Coordinating Committee with respect to all the details on taxes, fees, tariffs and other payments levied at the ports and checkpoints.

India’s entry into Ashgabat Agreement comes a month after the inauguration of the first phase of the Shahid Beheshti terminal at Chabahar port on December 3, 2017 which it had financed to the tune of $85 million. With the commissioning of the Shahid Beheshti terminal and India’s joining of the Ashgabat Agreement, a greater prospect now opens up for enlarging both the operational and practical scope of Chabahar to become a vital gateway and the shortest land route to Central Asia.

Here, it is important to note that the operation of a multi-purpose terminal at Chabahar including India’s plan to build a 610 km north-south railway from Chabahar to Zahedan couldn’t have been realised unless India joined a Central Asian-led transport mechanism.

Connecting to Afghanistan via Chabahar has been essential for India and it has already sent shipments of wheat to Afghanistan through Chabahar port. It seems Afghanistan has already shifted 80 per cent of its cargo traffic from Pakistan’s Karachi port to Iran’s Bandar Abbas and Chabahar ports. More Afghan trade is expected to eventually shift to the Chabahar Port and will drastically reduce Afghanistan’s dependency on Pakistan for transit of Afghan goods.

Afghan trade through Chabahar port is expected to touch $5 billion worth – once it starts feeding the International North-South Transport Corridor (INSTC). Its accession to the Ashgabat Agreement would enable India to utilise the existing transport and transit corridor to facilitate trade and commercial interactions with the Eurasian region. Further, this would synchronise with India’s efforts to implement the INSTC for enhanced connectivity.

The Iran-Turkmenistan-Kazakhstan (ITK) railway line will be the major route under the Ashgabat Agreement. It had become operational in December 2014 and has also been included as part of the India-funded INSTC. Therefore, the Ashgabat Agreement and INSTC will be easily synchronized. The operationalisation of the INSTC is inching closer to becoming a reality. It encompasses ship, rail and road routes connecting India with Russia, Central Asia and Europe via Iran.

In general, joining the Ashgabat Agreement would make it easier for India to reach out to Central Asia which houses strategic and high-value minerals including uranium, copper, titanium, ferroalloys, yellow phosphorus, iron ore, rolled metal, propane, butane, zinc, coking coal, etc. Kazakhstan alone wants to increase its non-oil exports by 50 per cent by 2025. And, without direct transport access, India cannot procure the Central Asian riches needed for its manufacturing economy.

India’s current trade with Central Asia is minimal at a little over $1 billion and is not growing much. The volume of trade with the region accounts for a mere 0.11 per cent of India’s total trade. And, India’s share in Central Asia’s total trade is only about one per cent. Only by improving transport connectivity can the prospect of commercial ties with the region be enhanced.

In the backdrop of joining the Ashgabat Agreement, India now must enlarge the strategic role of Chabahar port for evolving an integrated transportation network involving both the INSTC and the proposed transit corridor to Central Asia. In fact, the Chabahar-Iranshahr-Zahedan-Mashad corridor is the ideal route to connect to Sarakhs (Turkmen border). India has already committed to lay a railway track from Chabahar to Zahedan. Chabahar port can be connected with INSTC if the line were to be further extended till Mashad.

In fact, Chabahar-Iranshahr-Zahedan-Mashad can be linked to the existing Eurasian railway line which connects other parts of Central Asia. Similarly, this route can hook onto ongoing corridor plans and programmes like Transport Corridor Europe-Caucasus-Asia (TRACECA), Central Asia Regional Economic Cooperation (CAREC) and other multilateral transport initiatives in the region.

When it comes to Eurasia, container transport plays a significant role, and for India to join the competitive situation in the Euro-Asian transit system, active participation in transportation projects becomes essential. India’s connectivity approach need not be limited to increasing trade and commerce but should aim to enhance investment and services, interlinking sources of raw material, centres of productions and markets between India and Eurasia.

For example, a Free Trade Agreement (FTA) between India and Eurasian Economic Union (EAEU) could spur the unhindered flow of raw materials as well as inflow of capital and technology through new industrial infrastructure along Chabahar and INSTC routes.

Apart from the decision to accede to the Ashgabat Agreement, India has already acceded (on June 19, 2017) to the Customs Convention on the International Transport of Goods Under Cover of TIR Carnets (TIR Convention, 1975) which is used for international carriage of goods. TIR Carnets provide the principal security for movement of transit cargo. It is an internationally recognised harmonised customs transit document that accompanies the truck driver and the cargo across customs points from origin to destination. TIR facility is cost-effective. It reduces administrative and financial burdens with one international guarantee for a transport operator, replacing costly guarantees in each country of transit.

TIR journeys have become even faster and more efficient with IRU’s TIR-EPD, a free-of-charge web-based digital platform with applications available in 18 languages that allows transport operators to send advance information on goods transported under the TIR procedure. The eTIR system gives real-time data availability, online monitoring, improved reliability and flexible guarantees. Central Asian states are already members of the TIR Convention.

India has signed a bilateral agreement with Tajikistan in 2015 to enhance connectivity. Kazakhstan, Tajikistan and Kyrgyzstan are already members of the INSTC. India’s participation in Eurasian connectivity projects through the Ashgabat Agreement will serve to address the integration process under the EAEU and Shanghai Cooperation Organisation (SCO) in more viable ways.

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