India-Middle East-Europe Economic Corridor : Connectivity Dreams Amid Conflict

Context
Recently, the National Security Council Secretariat (NSCS) of India hosted officials from the U.S., UAE, Saudi Arabia, France, Italy, Germany, Israel, Jordan, and the European Union to review the progress of the India-Middle East-Europe Economic Corridor (IMEC). The meeting comes at a time when the project faces geopolitical hurdles due to instability in the Middle East.

Introduction
The India-Middle East-Europe Economic Corridor (IMEC) was announced during the G20 Summit in New Delhi (2023) with the aim of enhancing economic growth and connectivity between Asia, the Arabian Gulf, and Europe.
It was envisioned as a strategic alternative to the traditional Red Sea trade route, offering about 40% reduction in shipping time between India and Europe.

About IMEC

• The corridor has two main segments:

  • India–Gulf Corridor: Connecting India’s western ports to the UAE, then via high-speed freight rail through Saudi Arabia and Jordan to Haifa, Israel.

  • Gulf–Europe Corridor: Linking Haifa to Greece and Italy by sea, and onwards into Europe’s rail networks.

• Planned as more than a trade route, IMEC aimed to include:

  • Electricity and digital connectivity cables

  • Clean hydrogen pipelines

  • Measures to improve efficiency, reduce costs, create jobs, and cut emissions

• It sought to address long-standing trade issues like tariff disparities, low financial integration, limited insurance coverage, and varying port capacities.

Strategic Rationale

• Conceived during a period of relative Middle East stability in September 2023.

• Enabled by the trend of Arab normalisation with Israel, with Saudi Arabia close to joining.

• Strong economic justification:

  • The EU is India’s largest trading partner with $137.41 billion bilateral trade in FY 2023–24.

  • Non-oil trade with UAE and Saudi Arabia has been increasing rapidly.

• Designed to enhance India’s role in global supply chains while strengthening energy and digital connectivity.

Impact of the Gaza Conflict

• Less than a month after the announcement, the Gaza war disrupted the initiative.

• Jordan–Israel cooperation, crucial for the Middle East–Europe segment, weakened amid tensions over Palestinian displacement.

• Saudi–Israel normalisation stalled due to disagreement over Palestinian statehood.

• The conflict’s spread to Lebanon, Yemen, Syria, Iraq and tensions with Iran increased insurance costs and trade risks.

Despite these setbacks, Israel views IMEC as vital for deepening economic ties with the Arab world, excluding Palestine.

Current Status and Challenges

• The western leg of the corridor remains uncertain due to ongoing conflict.

• The eastern leg retains potential due to India’s strong partnerships with the UAE and Saudi Arabia.

• Initiatives like UPI integration can enhance digital trade connectivity.

• Intra-Gulf economic rivalries, such as Saudi measures to counter Emirati dominance, hinder unified planning.

Conclusion
The IMEC remains a strategically important initiative that can reshape India–Europe connectivity and diversify global trade routes. However, its success is contingent on Middle East stability and the resolution of the Palestinian statehood question. Until lasting peace is achieved, IMEC will remain largely a planning-stage “day-after” project, with its full potential yet to be realised.