EASTERN MARITIME CORRIDOR
- New Sea Route: The Eastern Maritime Corridor, a new sea route connecting Chennai in India to Vladivostok in Russia, has begun playing a significant role in enhancing trade between the two countries.
- The route has become particularly important for the crude oil trade, with India surpassing China as the largest buyer of Russian oil by mid-2024.
- The operationalisation of this route is providing two major benefits: reducing shipping time and cutting down transportation costs for commodities like crude oil, coal, LNG (Liquefied Natural Gas), and fertilisers.
KEY BENEFITS
- Time Savings:
- The Chennai-Vladivostok route covers 5,600 nautical miles and reduces the time for shipments between India and Russia by up to 16 days.
- Shipments that used to take over 40 days via the traditional route from Petersburg (Russia) to Mumbai (India) now only take 24 days.
- This is a significant reduction in time, which directly translates into savings.
- Shipping Speed: A large vessel traveling at 25 knots (about 45 km/h) takes approximately 12 days to travel from Vladivostok to Chennai, compared to 40+ days via the older route through Europe.
SHIPPING ROUTES
- Vladivostok: Located near the Sino-Russia border, Vladivostok is Russia’s largest port on the Pacific Ocean and acts as the primary hub for shipments to India.
- Indian Ports: The new route leverages eastern Indian ports like Chennai, Paradip, Visakhapatnam, Tuticorin, Ennore, and Kolkata, depending on the cargo type and final destination.
These ports are strategically located to facilitate the import of bulk goods like crude oil, coal, and fertilisers, as well as the export of Indian products to Russia.
COMMODITIES TRADED
- Imports from Russia to India:
- Crude oil remains the top import from Russia, followed by coal and coke, fertilisers, vegetable oils, and project goods.
- Exports from India to Russia:
- The key exports include processed minerals, iron and steel, tea, marine products, and granite.
- Other exports include processed fruits, juices, and natural stones.
IMPACT ON INDIA RUSSIA OIL TRADE
- India’s Growing Dependence on Russian Oil:
- By mid-2024, India had surpassed China to become the largest buyer of Russian oil, a significant shift in global oil trade dynamics.
- Urals crude, the flagship grade of Russian oil, constitutes over three-fourths of the crude oil purchased by India from Russia.
- Price Advantage:
- Russian crude is typically offered at a discount due to the geopolitical situation following the Ukraine war (2022).
- Despite discounts having reduced over time, Indian refiners continue to favor Russian oil because even at lower discounts, it still offers significant savings.
- Shipping Savings: The savings from the new sea route further sweeten the deal, making Russian crude even more cost-effective for India.
- Impact of Shipping Cost Savings: The new route significantly reduces the overall cost of importing Russian oil by lowering transportation expenses, which benefits Indian refiners.
STRATEGIC & GEOPOLITICAL IMPLICATIONS
- Geopolitical Leverage:
- India’s growing engagement with Russia, particularly in energy trade, serves multiple purposes beyond economic gains.
- It also helps India in curbing Russia’s tilt towards China and ensures strategic cooperation between the two countries.
- India relies on Russia for the maintenance of its armed forces and cooperation on nuclear-powered submarines.
- India-Russia Bilateral Relations: This increasing trade, particularly in energy, is expected to solidify India-Russia ties Russian President Vladimir Putin is set to visit India in 2025, marking a milestone in diplomatic relations.
CHALLENGES & FUTURE PROSPECTS
- Reliability of the New Route: While the Eastern Maritime Corridor has provided significant benefits, ensuring consistent and reliable shipping services will be crucial for its long-term success.
- Expansion of Trade: As the route gains more operational momentum, there is potential for expanding trade in other products like fertilisers and containerized cargo, which require longer-term commitments from both countries.
- Diversification of Imports: The route also has potential to facilitate the import of a wider variety of commodities from Russia, beyond crude oil and coal.
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