The September Arctic sea-ice is now shrinking at a rate of 12.2% per decade compared to its average extent during the period from 1981 to 2010. File
| Photo Credit: Reuters
Global trade is swinging like a pendulum, with potential headwinds from the U.S. nudging each nation to start doubling down on alternate trade strategies. In such a scenario, partnerships around supply chains and trade routes are expanding based not only on the current fracturing of regional blocs, but also on climate change.
The frozen frontier of the Arctic serves as a canary in the coal mines for the impending climate catastrophe. It also serves as the source of great geopolitical leverage as sea levels continue to rise and new trade routes emerge. The Arctic reflects a critical energy source for the Global South in the years to come. While not recklessly exploiting the Arctic reserves, India should also get a say in the commercial opportunity for the unseen future.
The dying canary signals new trade routes
The September Arctic sea-ice is now shrinking at a rate of 12.2% per decade compared to its average extent during the period from 1981 to 2010 (NASA). This melting ice is also opening up access to a new trade route called the Northern Sea Route (NSR) in the Arctic, linking the Atlantic and the Pacific. This will exponentially transform global trade by shifting the flow of cargo and saving time and freight costs. The NSR is being hailed as the shortest route between Europe and Asia. India’s long-term approach to exploring new mega ports and new routes — not just from an economic lens, but also from a strategic and geopolitical lens — makes the NSR crucial.
The number of Observers at the Arctic Council outnumbers the number of Arctic states. This indicates the growing recognition of the vulnerability of existing trade routes to geopolitical tensions.
India began its engagement with the Arctic early by signing the Svalbard Treaty in 1920 and is the only developing nation besides China that has an Arctic research base (Himadri). Last year, the Institute for Governance and Sustainable Development and the National Council of Applied Economic Research partnered to model how changes in the Arctic, specifically the loss of sea ice, could influence India’s monsoon patterns and agricultural outputs.
But to begin a timely action plan for the NSR, India’s Arctic policy released in 2022 needs to be streamlined towards achieving its goals. India will need shipbuilding muscle to sail through the NSR’s turbulent waters. The 2025-26 Budget set up a $3 billion Maritime Development Fund for the Shipping Ministry along with promoting shipbuilding clusters to increase the range, categories, and capacity of ships. Shipbuilding suited to Arctic requirements is key given that travel conditions would be quite harsh in the short-term. This means India needs to make adequate investments in ice-breaking fleets and other structural upgrades.
There is an urgent need for India to engage in multilateral dialogue on capacity building, training requisites, and knowledge sharing. Could 2025 to be the year of action?
This year, the Arctic Circle India Forum is taking place on May 3 and 4 in New Delhi. This should help contextualise the dialogue from an Asia- and India-focused lens. The forum should serve as an impetus to move the needle forward on India’s well-thought-out Arctic policy with stakeholder consultations, the forging of partnerships, and perhaps the appointment of a ‘polar ambassador’ to present India’s case internationally.
As international cargo shipment on the NSR increased exponentially from 41,000 tonnes in 2010 to almost 37.9 million tonnes in 2024, India also needs to be cognisant of studies surfacing, such as in the scientific journal Nature Climate Change, showing that global temperatures in 2024 breached the 1.5°C mark above pre-industrial levels. This suggests that even a single month or year at 1.5°C global warming may signify that Earth is entering a long-term breach of the vital Paris Agreement threshold. How close to the sun should we fly so that we do not lose our commercial vantage point but also do not call for an expedited disaster in one of the most fragile ecosystems on the planet? This presents a pressing policy issue for India and echoes the need for like-minded allies.
Playing with ice and fire
With its vast Arctic coastline, extensive experience in Arctic navigation, and training of personnel, Russia is an obvious partner for India to explore the NSR. The decision to establish a working group on the NSR under the bilateral intergovernmental commission on trade, economic, scientific, technical, and cultural cooperation was made during Prime Minister Narendra Modi’s summit meeting with Russian President Vladimir Putin in Moscow in July last year. Also, the Chennai-Vladivostok Maritime Corridor emerges as a potential bridge to the NSR ports such as Pevek, Tiksi, and Sabetta.
However, if India inclines towards the Russian bloc, then it would be implying support to Chinese efforts, such as the Polar Silk Road which China is building as a northern extension of its Belt and Road Initiative. Not only would the NSR help China bypass the Malacca Strait chokepoint completely, but it would also give it much more control over the Arctic route.
If India supports the Western bloc and partners with the U.S., it could lose its perceived potential stake in the massive resources that currently fall under Russian control in the area. The ideal but obviously challenging solution would be to find a way to work with both the U.S. and Russia. Other partners should include Japan and South Korea. Both countries share India’s concerns about the growing cooperation between China and Russia in the Arctic and about their businesses losing out on Arctic opportunities to Chinese competitors. The trio should advocate the rectification of disparities within the Arctic Council and promote a more inclusive and equitable Council.
Manash K. Neog, Managing Director of Chase APAC,a public policy and research consulting firm; Swati Sudhakaran, Senior Manager at Chase
Published – April 23, 2025 12:54 am IST
