Food security to hydrogen transport: Formats exist for IMEC's success

India's initiatives have already laid some of the groundwork for the proposed infrastructure corridor

The India-Middle East-Europe Economic Corridor (IMEC) announced in New Delhi on the sidelines of the G20 summit is a viable idea for infrastructure as several initiatives led by India to connect countries in the region are already in the works.

Countries that signed a memorandum of understanding (MoU) for IMEC on September 9 already have joint investments in food, water, energy and transport. Many investments are partly financed by multilateral development banks, removing a potential irritant for India in joining mega infrastructure projects that have foreign money.

The IMEC model came about at the inaugural I2U2 summit in July 2022 when the United Arab Emirates (UAE), Israel and India agreed on an ambitious Middle East Food Corridor and the USA gave its support.

India is the world’s fourth largest food producer by the total value of agricultural production, so Middle East nations have incentive to use its potential. UAE, till 2019, had announced projected investments worth $7 billion in India to secure a food supply chain that uses climate-smart technologies. Israel has invested in India in water and farm management practices and the two sides have set up 29 agricultural centres of excellence.

The same model could be followed in shipping, ports, and rail transport. In follow-up meetings for the I2U2 model, USA’s National Security Adviser Jake Sullivan met with Saudi and Indian government officials in May this year to promote the idea of a rail-cum-port network that would have India at one end and be financed by global money.

A rail network would ship goods from India to the UAE which would then be sent by train across Saudi Arabia and Jordan before crossing into Israel at Beit She’an and arrive at the Haifa port. While UAE and Israel are in talks to expand their railway networks, the work for it will be underpinned by investments by Indian companies. Registration by Indian companies at UAE’s free trade zone increased by 30 percent in 2022-23 and India’s Adani Group has already invested in Israel’s Haifa port with the local Gadot Group for a 30-year lease.

In July, Indian Oil Corporation (IOC) signed a deal valued at up to $9 billion to import LNG from UAE for 14 years. The state-owned company later made a separate agreement with France’s TotalEnergies to import 0.8 million tonnes of LNG annually for 10 years.

Agreements to fulfil shared interests underwrite the confident language of the IMEC declaration, which says “it will be comprised of two separate corridors, the east corridor connecting India to the Arabian Gulf and the northern corridor connecting the Arabian Gulf to Europe”.

“This is nothing less than historic. It will be the most direct connection to date between India, the Arabian Gulf and Europe,” said European Commission president Ursula von der Leyen at the declaration.

India, with its comfortable relations with the Middle East, has the easier part of implementing IMEC. It is the open and sometimes latent animosity between Middle East nations that could make the project difficult to execute.

Barely 48 hours after the IMEC MoU was signed, India started deepening its ties with the Middle East. InvestIndia, the national investment promotion and facilitation agency, started a road show in Israel on Monday to present business opportunities in India and signed an agreement with its counterpart there.

Indian civil servants in key ministries are working to put into action within 60 days the MoU’s target to “develop and commit to an action plan with relevant timetables."

An Indian government official said the country has planned several investments for the route. “It is not necessary to build up a huge shelf of projects at one go, but create a viable platform to clear them,” said the official, who didn’t want to be named because of the sensitivity of plans.

IMEC’s plans for a hydrogen pipeline to facilitate exports to the European Union (EU), as enunciated in the MoU, will be welcomed by India. The country’s private and state-owned companies have committed to annually produce 5 million tonnes of the gas by 2030. B K Bhalla, secretary in the ministry of new and renewable energy, had said in July that India will seek to export 70 per cent of this volume. IMEC notes “along the railway route, Participants (countries) intend to enable the laying of cable for electricity and digital connectivity, as well as pipe for clean hydrogen export”.

The other development welcomed by India is that no IMEC project needs to work around sanctions on Iran and Russia. India wishes to expand the volume of rupee trade, an aim which sits well with the expansion of trade. But in Iran and Russia, expanding trade in rupee has run into the wall of UN and US sanctions. An Indian bank official said US and multilateral development banks’ support for IMEC will encourage investors to put money into "difficult to monetise infrastructure projects".

In April, UAE and India for the first time settled an oil consignment in Indian rupees. India will wish as the IMEC expands, the rupee’s role will strengthen in the international market. The Reserve Bank of India (RBI) has permitted banks in 18 countries to open special rupee vostro accounts to allows account holders to buy India government securities. The RBI is expected to expand the list to include all the IMEC signatory countries in the list, which has Israel, the UK, and Russia now. That expansion of the list could happen now as the world seeks for an alternative to China’s Belt and Road Initiative.