Contours Of IMEC, Mega Connectivity Project Linking India With West Asia & Europe, May Get Tweaked

“The tension in the Middle East has stalled the project, though construction work on the other side of the Gaza Strip, stretching across the UAE and Saudi Arabia, is underway,” a person who is monitoring the project told The Secretariat. 

Prime Minister Narendra Modi's visit to Jordan and Oman has also raised hopes that the IMEC project will get a push. Both Oman and Jordan will play a key role in giving shape to the project.

The IMEC, as per the original plan, comprised a multimodal network including road, rail and waterways. However, now with the new geopolitical risks and altered dynamics, the project may come into shape in phases.

Funding Continues To Pose Challenges

Besides the war in Gaza, funding for the project has also remained patchy. While the US and European Union were supposed to provide a sizeable sum for the project, there has not been any specification on that. 

Though the participating nations were to jointly bear the cost of the mega project via public investment, a large chunk was to come from sovereign wealth funds and multilateral banks as well.

There is still no clarity on the issue of funding.

According to the Observer Research Foundation, in the long-term, IMEC will attract hundreds of billions of dollars in large-scale investment, creating high-value jobs and unmatched prosperity in the region. "The problem is there is nothing concrete on this at this point," sources said.

The IMEC would have given India direct access not only to West Asia but also to Europe. As per the plan, the Mundra and Mumbai ports will get direct access and connectivity with the UAE ports of Fujairah and Jebel Ali. 

Economic activities and trade between India and the UAE and other West Asian nations like Saudi Arabia and Oman are rising, with the focus now on boosting non-oil trade. 

“The IMEC, crucial for bolstering trade, has not been stalled as perceived. It is taking shape, albeit very slowly. But then such infrastructure projects take time to take shape, and given the rise in global tensions, it may take a little longer for it to take shape,” a diplomat, who wished to remain anonymous, said.

Why IMEC Is Key 

The multimodal connectivity project, signed at the G20 Summit in New Delhi, holds significant geopolitical and economic implications for India and the Gulf region. Though sources said that the delay in the IMEC implementation will have little impact on bilateral trade between India and the UAE, the project is being seen as an alternative to the China-led Belt and Road Initiative.

India and Oman have just signed the Comprehensive Economic Partnership Agreement (CEPA), which will expand trade between the two countries. In 2022, India and the UAE signed the CEPA. This is regularly reviewed. In fact, the two governments have also set up an investment and trade facilitation organisation, the CEPA Council, to streamline economic activities between them.

Trump's Initial Support For IMEC  

Despite the ongoing turmoil in and around the Gaza Strip due to the war between Israel and Hamas, which dealt a blow to the project, US President Donald Trump’s interest in the implementation of the project had raised hopes.

Trump had hailed the project, calling it one of the greatest trade routes in history. Despite Trump’s thrust to give shape to the project, challenges remain. “Such a massive initiative encompassing several nations typically poses challenges. The partner countries need to iron out differences and come to a solution,” a person overseeing a part of the project implementation said.