When the India-Middle East-Europe Economic Corridor (IMEC) was unveiled at the G20 summit in New Delhi in September 2023, much of the commentariat dismissed it as a press release in search of a route. Within weeks, the war in Gaza and the ensuing volatility in several parts of the world appeared to confirm that scepticism. Two and a half years later, however, that early caution looks premature. Construction on key IMEC components began in April 2025, and India and the European Union (EU) concluded their long-pending Free Trade Agreement (FTA) on 27 January 2026, an accord that liberalises tariffs on 96.6 per cent of EU goods exports to India and 99.5 per cent of Indian tariff lines on the EU side.
The temptation, naturally, is to read this story as New Delhi versus Beijing - yet another chapter in the Belt and Road counter-narrative. A closer reading suggests something different: a broader South-South connectivity model that is less grandiose than China's Belt and Road Initiative (BRI), less ideological than the West's Build Back Better World, and built around outcomes that host countries can measure in terms of jobs, tax receipts, and skills. The economic case has also strengthened, with estimates suggesting that IMEC could reduce Asia-Europe transit time by up to 40 per cent and logistics costs by around 30 per cent, while generating transit revenues for countries along the corridor once rail and cargo infrastructure are fully developed.
At the Indian end, IMEC's key anchor is the Vadhavan deep-water port in Palghar, Maharashtra, a ₹76,220 crore (about US$8.1 billion) project approved by the Union Cabinet in June 2024. More significantly, the Mediterranean Shipping Company's (MSC) Terminal Investment Limited (TiL) has committed around US$2.3 billion to the project, signalling that private capital is increasingly willing to back the Indian leg of IMEC without relying solely on sovereign support.
The deeper interest of a project like Vadhavan lies less in the headline numbers than in the macroeconomics they set in motion. A deep-water port able to receive the largest container vessels changes the unit economics of trade: bigger ships spread fixed voyage costs over more cargo, and a single mainline call can replace several feeder movements through Colombo or Singapore. For India, which has long trans-shipped a sizeable share of its containers through foreign ports, repatriating that traffic keeps handling fees, insurance margins and ancillary services within the domestic economy rather than exporting them. This is the logic of scale economies working in India's favour - and, in principle, in favour of any partner economy that can plug into the same network.
The Neighbourhood Pays Attention
The truest test of any connectivity model lies not in what it does for the originating economy but in what it leaves behind in partner ones. On that count, three South Asian case studies are instructive. In Sri Lanka, the Adani-John Keells-Sri Lanka Ports Authority consortium's Colombo West International Terminal (CWIT), a US$800 million build-operate-transfer venture, became operational in April 2025. By the third quarter of that year, CWIT had emerged as the single largest contributor to Sri Lanka's foreign direct investment (FDI) inflows, channelling US$229 million in nine months and helping push the island's total FDI 138 per cent above 2024 levels.
In the Maldives, the US$530 million Greater Male Connectivity Project, combining a US$100 million Indian grant with a US$400 million concessional line of credit and executed by Afcons Infrastructure, remains the largest infrastructure undertaking in the country's history. The 6.74-kilometre bridge-and-causeway link connecting Male, Villingili, Gulhifalhu and Thilafushi will, once commissioned, serve roughly half of the Maldivian population.
In Bangladesh, the picture is more layered, complicated by the 2024 political transition and the recalibration that followed. Even so, the permanent transit access granted to India through the Chattogram and Mongla ports already roughly halves the distance to India's north-eastern states and sidesteps the chronically congested Siliguri corridor. India's bilateral commercial presence in Bangladesh spans fast-moving consumer goods, power, automobiles and pharmaceuticals. The proposed Indian economic zones at Mirsarai and Mongla, however, illustrate the model's fragility, where Bangladesh withdrew both after nearly a decade of limited progress.
The Digital Corridor That Does Not Appear on Maps
The connectivity story is no longer told only in steel and concrete. India has signed memoranda of understanding (MoUs) with 24 countries on its India Stack and Digital Public Infrastructure (DPI) framework, including partners such as Sri Lanka, the Maldives, Mongolia, Sierra Leone, Tanzania, Kenya, and Ethiopia. The Unified Payments Interface (UPI) is now live in eight countries - the United Arab Emirates (UAE), Singapore, Bhutan, Nepal, Sri Lanka, France, Mauritius and Qatar - with India and Israel agreeing in February 2026 to extend the system to Israel. This reflects a quieter but important shift in India's connectivity strategy. Unlike large infrastructure loans, digital public infrastructure travels as a shareable architecture, allowing partner countries to build population-scale systems at relatively low cost while retaining greater control over their data and public platforms.
This is where India's model differs from China's Belt and Road Initiative. While the BRI has often been associated with large project finance and rising repayment pressures in several developing countries, India's approach - best described as grants-plus-investment-plus-architecture - relies on three instruments working in concert: concessional credit through institutions such as the Export-Import (Exim) Bank of India, equity-led commercial investment and adaptable platforms such as UPI, DigiLocker and Aadhaar-linked architectures.
To be sure, India's connectivity model is hardly free of friction. The collapse of US Development Finance Corporation (DFC) financing for CWIT, the slow start of IMEC railway construction across Saudi Arabia and Jordan and the persistent absence of a permanent IMEC coordinating secretariat all indicate that India still has work to do on the institutional plumbing. Ultimately, India's connectivity approach seeks to build trust by offering commercially viable, politically acceptable partnerships that expand access without deepening dependence or reducing the host country's policy space. If the approach is sustained and if the friction points are addressed, it could become one of India's more notable contributions to cooperation across the Global South.
(The author is Fellow & Lead, World Economies and Sustainability, CNED)
Disclaimer: These are the personal opinions of the author
