The North-South corridor. Export and import

The Roscongress Foundation commissioned a study from the International Trade and Integration Research Center, exploring the significance and potential of the North-South International Transport Corridor for Russia's foreign trade. The second part deals with the specifics of export and import cargo flows between Russia and its key BRICS+ partners.

From 2018 to 2022, export cargo traffic in the southern direction saw consistent growth, with a significant increase in shipments to India in 2022, primarily due to the reorientation of energy resource exports from the European market.

India's foreign policy and socio-economic dynamics position it as a highly promising market for Russia, not only within the North-South ITC, but globally.

India's participation in global trade has it own distinct features. India has historically forged strong economic ties with the United States and Great Britain, along with energy-resource partnerships with Persian Gulf countries and connections with Asia-Pacific states. Given its limited natural resources, the country has to prioritize energy supply. Mineral fuels, including oil and petroleum products, make up nearly a third of the country's imports. Gemstones imports rank second and serve as raw materials for the country's advanced jewelry industry. The country also relies heavily on imports of electronics from China and other East Asian nations.

Preliminary data shows that in 2023, Russian exports to India surged by 1.8 times to reach $60.1 billion, which allowed Russia to become India's second supplier after China. Enhancing North-South corridor’s operations was crucial, enabling a 50% reduction in net transport costs along the eastern route.

Each of the three branches of the North-South ITC has distinct infrastructure characteristics and opportunities, that bring together particular groups of participating countries, with Russia and India actively engaged in all three of them.

Since 2019, Iran has been the largest importer of physical cargo from Russia in the Middle East, though in 2022, its imports nearly matched the increased volumes to Saudi Arabia.

Russian Railways reports that the main exports from Russia via the ITC include oil and petroleum products, ferrous metals, forestry goods, paper, chemicals, fertilizers, foodstuffs, and various containerized commodities. Russia shows export potential in wheat, coal, timber, and select chemical products.

In recent years, Russia has solidified its role as a key supplier of high-quality foods to Persian Gulf markets, steadily increasing exports of grain, vegetable oils, confectionery, meat, dairy, and especially halal products.

Iran and Saudi Arabia remain the key importers of Russian foods in the Middle East. In physical exports to these countries, food accounts for 84% of supplies. Additionally, Kuwait, Bahrain, and Qatar are increasing their purchases, while exports to the United Arab Emirates are showing strong growth.

Last year, the UAE increased its imports of Russian grain, including wheat - by 2.7 times, to approximately 180 million dollars. Meanwhile, the supply of high-value products like sunflower oil increased 2.2 times to $6.7 million. Meat, dairy, beverages, and other processed goods show significant export potential, too.

In 2023, the volume of bilateral food trade between Russia and the Persian Gulf countries surpassed $1.6 billion, a 1.7-fold increase over the past five years.

Various products, including foodstuffs, building materials, chemicals, consumer items, automotive components, synthetic fibers, rolled ferrous metals, and computer hardware, are being transported to Russia via the ITC.

Mineral products, foodstuffs, primarily fruits, beverages, vegetable and animal oils, as well as ferrous metals may become the key imported goods.

India, one of Russia's key trading partners from the global South, is boosting supplies to the Russian market. Exports of Indian goods rose by 1.4 times to $4 billion.

India's export potential for containerized shipping primarily lies in pharmaceuticals and textiles, each accounting for approximately 5% of the country's export value, while its imports largely consist of raw materials less suited for containerization.

The recent Free Trade Agreement between Russia and Iran suggests an anticipated increase in trade and cargo flows between the two countries.

The agreement's tariff preferences apply to over 95% of Russian exports to Iran. The agreement includes systemic obligations for the parties, establishing a predictable regulatory environment for Russian suppliers in Iran. Full-fledged negotiations to establish a free trade zone between the Eurasian Economic Union and India are set to commence in 2024.

The first part of the study. Russia and BRICS: shaping the logistics of the future