A few years ago, fertiliser major Iffco dabbled with the idea of sourcing rock phosphate from Kazakhstan, which sits on 2 billion tonnes of the mineral.
But the Indian cooperative giant had to drop the plan midway discouraged by the high cost of logistics. Iffco is not alone; several Indian companies had to drop plans to trade with Central Asian countries such as Kazakhstan. But not any longer, it seems.
A proposed 70-km railway line in an obscure patch of northern Iran could change all that.
Once ready, the railroad could help India save crores of rupees in logistics to Central Asia, the 55-million-people market. One of the most prosperous and fastest growing regions in the world, Central Asia is a key source for uranium and fertilisers.
The line links the Iranian city of Gorgan to the Iran-Turkmenistan border. Gorgan lies 400 km away from Iran’s capital, Tehran, and is some 30 km from the Caspian Sea.
The line will link another recently-built railroad that goes right up to Uzen town in southern Kazakhstan.
In fact, the Central Asian republics are closer to India than many of its trading partners — a flight to the farthest point in the region will take no more than three hours — but the presence of the Himalayas and Pakistan’s refusal to allow Indian goods to pass through its territory make getting goods from Central Asia a logistics nightmare for India.
Doulat Kuanyshev, Kazakhstan’s Ambassador to India, stresses that the economic relations between the region and India have been rather low due to difficult logistics.
For instance, a company exporting uranium from Kazakhstan should take it by land to the Black Sea and ship it all the way through the Mediterranean, the Suez Canal, the Red Sea and the Arabian Sea. The process could take 25 days. If the same comes through China’s Lianyuangang port, 40 days.
In contrast, the Iran route could take just about 15 days. And India is now accelerating efforts to build a port in Iran’s Chabahar. Gorgan is not too far from Chabahar. India’s trade with Central Asian markets stood at $746 million in 2012-13 against China’s $46 billion.
“Iran is an important, but unspoken, factor in India-Central Asia relations,” says Arvind Gupta, Director-General, Institute for Defence Studies and Analyses.
Now that the Islamic republic has entered a nuclear pact with a host of western nations, experts hope the railroad project will also get a fillip. According to former Chief Economist of Fertiliser Association of India Uttam Gupta, the proposed railway line could help India diversify sources of fertilisers and control subsidy.