The India – Middle East – Europe Economic Corridor (IMEC)

The 18th G20 Summit hosted by India during September 9-10, 2023, marked the first-ever G20 summit hosted by the country. With participation by 43 world leaders, and the highest turnout at any G20 Summit in history, India brought the world together at a time when geopolitical tensions among major powers are running high and much of the world is despondent about the state of multilateral institutions.  In this second article of a two-part series, we examine a major outcome that is relevant for globally minded companies.

India – Middle East – Europe Economic Corridor (IMEC)

During the G20 Summit, a Memorandum of Understanding was signed among the governments of India, the U.S., Saudi Arabia, the European Union, the UAE, France, Germany, and Italy to establish the “India – Middle East – Europe Economic Corridor” (IMEC). IMEC is envisioned as a network of transportation routes encompassing railways and sea lanes. It is designed to increase trade between South Asia, the Middle East and Europe. It is also meant to counter China's project to build new global trading routes, known as the “Belt and Road Initiative”. We see three major benefits of IMEC:

• IMEC could be a boon for the U.S., which has long sought to counter the Belt and Road Initiative. The IMEC announcement builds on the G7’s June 2023 pledge to raise $600 billion in private and public funds over five years for infrastructure projects in developing countries. IMEC’s objective to facilitate hydrogen energy transports also aligns with the U.S.’ and EU’s strategic interest to transition Europe away from Russian fossil fuels.

• European Commission President Ursula von der Leyen anticipates that IMEC will make trade between India and Europe 40% faster while reducing costs by 30%.

• The IMEC departs from previous Western trade initiatives in the region in a major way given the actors involved, with India as a key proponent and a focus on both North-South and South-South trade.

Congratulations to India for showing leadership on a global scale. India not only managed to make this G20 Summit a much more dynamic platform, but also revived faith in the ability of multilateral structures. In the process, India also underscored its own credentials as a leading player in the global hierarchy.

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