Why Russia is banking on $1.7 billion railway plan in Iran to come closer to Mumbai

NEW DELHI : Russia is banking on rail freight to mitigate the effect of Western sanctions on its economy. Moscow is investing billions to expand its trade ties with India and the countries of the Persian Gulf.

For this, Russia and Iran signed a deal last year to build an Iranian railway line as part of the International North–South Transport Corridor (INSTC). The rail link will connect two Iranian cities, Astara and Rasht, joining Iran and Azerbaijan to the north and then to the Russian railway grid, as per The New York Times (NYT).

Russia places bet on Rasht-Astara railway

For years, Europe was Russia’s single largest market for trade. However, Western sanctions following Moscow’s invasion of Ukraine have ended that.

Since then, Russia has set its sights on Asia to boost its trade, including China, India and Iran.

With this goal, Russia is aiding Iran to build a 164km Rasht-Astara railway that costs $1.7 billion (about Rs 14,000 crore) along the Caspian Sea coast that would help link Russian ports on the Baltic Sea with Iranian ports in the Indian Ocean and the Gulf.

“The unique North-South transport artery, of which the Rasht-Astara railway will become a part, will help to significantly diversify global traffic flows,” Russian President Vladimir Putin had said last May.

Russia has decided to loan $1.4 billion (about Rs 11,000 crore) to Iran to finance the ambitious project, NYT reported.