Introduction

The India-Middle East-Europe Economic Corridor (IMEC) was unveiled during the G20 Summit in New Delhi in September 2023 as a major initiative aimed at linking India, the Gulf, and Europe through a comprehensive network of rail, ports, energy, and digital infrastructure.[1] The project was presented as a strategic alternative to China’s Belt and Road Initiative (BRI), with the goals of improving supply-chain resilience, reducing shipping times by almost forty percent, and fostering collaboration between emerging and established economies.[2]

Two years later, IMEC’s progress has decelerated. The resurgence of conflict in the Levant, financial limitations along the Jordan-Israel border, and rising trade tensions between India and the United States—particularly Washington’s decision in 2025 to impose extra tariffs on Indian products—have all added to the uncertainty regarding its implementation.[3] Recent developments show how geopolitical tensions can disrupt multilateral initiatives that are based on economic practicality.

The corridor still presents significant opportunities, especially for Gulf economies like the United Arab Emirates and Saudi Arabia, which are at its geographic and logistical center. Their ability to transform connectivity into growth in industry, technology, and green energy could support IMEC even during broader diplomatic tensions. This insight raises the question: How and when can the IMEC corridor regain momentum, given the current strain in India-U.S. relations?  The revival of IMEC depends on a systematic approach to Gulf-led development, targeted trade adjustments, and a renewed focus on multilateral financing from 2026 to 2030.

Background: The IMEC Vision and Its Stalled Progress

The India-Middle East-Europe Economic Corridor (IMEC) aims to enhance trade and energy connections across continents. The project includes two linked routes: the Eastern Corridor, which connects India to the Gulf through maritime and rail networks via the UAE and Saudi Arabia, and the Northern Corridor, which links Saudi Arabia through Jordan and Israel to European ports like Piraeus in Greece.[4] These routes aimed to establish a smooth logistics chain by connecting ports, enhancing digital connectivity, and linking energy pipelines across three continents.

The corridor’s purpose extended well beyond just trade. IMEC was initiated by the United States and India, with backing from Gulf and European partners, as part of a larger strategy as an alternative to China’s Belt and Road Initiative (BRI) and to reshape global connectivity through transparent, rules-based collaboration.[5] Initial feasibility studies indicated that IMEC might reduce freight transit time between India and Europe by almost 40 percent and cut shipping costs by approximately 30 percent, leading to notable efficiency improvements.[6]

Since 2024, progress has not been consistent. The rising conflict in Gaza and heightened tensions in the Red Sea have hindered the development of the Northern Corridor. Meanwhile, trade disputes between India and the U.S., marked by tariff hikes and stalled negotiations, have negatively impacted investor confidence.[7] The estimated US$5 billion financing gap for the Jordan-Israel segment is still unresolved, with political and security risks discouraging private investment.[8] Consequently, IMEC has transitioned from being a representation of global collaboration to an example of how regional diplomacy and industrial efforts—especially from the Gulf states—can maintain a multilateral initiative in a divided geopolitical environment.

Analytical Context: Tensions Between India and the U.S. and the Influence of the Gulf

IMEC is intricately connected to the changing dynamics of India-United States relations, which have encountered difficulties since mid-2025. In August 2025, Washington imposed a 25 percent tariff on several Indian goods, pointing to “unfair energy practices” and obstacles to market access.[9] New Delhi condemned the action as politically motivated and retaliated with its own specific duties. The tariff dispute has negatively impacted business confidence, postponed joint investment discussions, and hindered progress on IMEC’s financing framework.[10]

In addition to trade, there has been a noticeable decline in strategic trust. India’s ongoing oil imports from Russia and its careful approach to U.S. export-control policies have increased tensions, while the current state of U.S. politics has made it more difficult to rationalize trade concessions.[11] Military exercises like Yudh Abhyas and Tiger Triumph persisted through 2025, indicating that the defense partnership is still strong despite the decline in economic collaboration.[12] This duality—security alignment alongside trade tension—highlights why IMEC’s future relies on fostering selective cooperation instead of pursuing a complete diplomatic reset.

In the face of these challenges, the Gulf states have become key stabilizers. The UAE and Saudi Arabia are at the core of IMEC and are using the current slowdown to strengthen their industrial and technological foundations. Both have increased their investments in modernizing ports, utilizing AI for logistics, advancing semiconductor-related manufacturing, and developing green-hydrogen infrastructure, ensuring that corridor development aligns with their national goals for economic diversification.[13] Sovereign wealth funds like Mubadala, Abu Dhabi Developmental Holding Company (ADQ), and the Public Investment Fund (PIF) have ramped up co-investment in transport and digital infrastructure projects that are intended to be “IMEC-ready.”[14]

Gulf economies are changing from transit nodes to centers of production and innovation, establishing themselves as the economic engine of the corridor. Despite ongoing disputes between India and the U.S., continuous industrial growth led by the Gulf can maintain the momentum of IMEC and lay the groundwork for renewed trilateral cooperation when diplomatic conditions become more favorable. The Gulf serves not just as a geographical link, but also as a connection amidst geopolitical uncertainty.

How IMEC Can Recover Momentum

To revive IMEC from its current halt, a step-by-step approach is necessary. This should distinguish between feasible, low-risk projects and those that involve political sensitivities. Instead of anticipating a complete diplomatic reset between India and the U.S., concerned nations can make incremental advancements through three interconnected areas: mitigating risks in critical chokepoint segments, boosting Gulf-led development, and revitalizing targeted multilateral collaboration.

A. Short-Term (2025-2026): Stabilization and Sequencing

In the short term, IMEC partners should focus on the India-UAE-Saudi segment, as it is politically stable and economically viable.[15] The integration of construction and logistics can progress within the framework of the Comprehensive Economic Partnership Agreement (CEPA) between India and the UAE, which effectively streamlines customs, digital documentation, and port connectivity.[16] In contrast, the Jordan-Israel segment, which faces regional volatility, should be temporarily protected through special-purpose vehicles (SPVs) that utilize milestone-based financing linked to security benchmarks.[17]

 A temporary agreement on trade tariffs is also crucial. Establishing corridor-specific exemptions for transport equipment, logistics technology, and renewable-energy inputs may protect IMEC from the wider India-U.S. trade dispute.[18] These limited carve-outs would show political goodwill and ensure the continuity of the supply chain. The digital pillar, which includes subsea fiber cables and cross-border data centers, should be prioritized, as it encounters little geopolitical resistance and directly aids Gulf diversification objectives.[19]

B. Medium-Term (2026-2028): Multilateral Expansion and Financing

After stabilization is reached, IMEC’s green-energy and logistics sectors can grow with wider multilateral involvement. The European Union’s Global Gateway initiative provides a reliable financing framework that can cover the projected US$5 billion shortfall for the Jordan-Israel route.[20] Working with European partners would help to remove politics from procurement processes and draw in private investment.

In this timeframe, Gulf states have the opportunity to spearhead the development of hydrogen-export infrastructure and AI-driven logistics zones, leveraging current industrial strategies like Saudi Vision 2030 and the UAE’s Operation 300bn as guiding frameworks.[21] These projects offer definite economic benefits even prior to the complete operation of the corridor, demonstrating IMEC’s potential to doubtful investors.

C. Long-Term (2028-2030): Integration and Optimization

By 2028, the combination of Gulf-driven infrastructure, Indian manufacturing capacity, and renewed transatlantic financing could yield measurable outcomes. Test shipments between Mumbai and European ports—via Jebel Ali, Khalifa, and King Abdullah ports—could reduce transit times to roughly 12-14 days, down from the current 22-24.[22] As the land bridge becomes functional, data-driven logistics and hydrogen-energy exports will redefine the corridor as a hybrid trade-and-technology network, not merely a transport route.

Ultimately, IMEC’s recovery hinges on incremental credibility—building what is possible now while keeping the full geopolitical vision intact. Gulf economies, by anchoring early progress, can convert IMEC from a stalled project into a living platform for regional industrial transformation.

When Can IMEC Regain Traction?

The India-Middle East-Europe Economic Corridor will not see a return to full-scale development anytime soon. The recovery hinges on a phased approach that aligns diplomatic progress, financial resources, and construction readiness in various regions. A three-stage timeline outlines when we can expect to see real progress, based on existing policy and market signals.

A. Reset Phase (Late 2025-Mid 2026)

At this stage, reducing tariffs between India and the United States will be essential.[23] The two governments have resumed trade discussions in Washington, looking into specific exemptions for essential logistics and digital equipment.[24] The UAE and Saudi Arabia will keep enhancing their port and rail systems as part of their national diversification plans, making sure that the India-Gulf connection stays strong despite wider uncertainties.[25] The EU Global Gateway and World Bank-supported regional funds are expected to indicate initial financial commitments for feasibility and environmental impact studies.[26]

B. Build-Out Phase (2026-2028)

By 2026, the integration of customs between India and the UAE through CEPA will facilitate easier cargo clearance and the use of shared digital documentation platforms.[27] Building green-hydrogen terminals, data-connectivity hubs, and multimodal logistics parks throughout the Gulf can progress without relying on the more politically delicate northern land corridor.[28] This period is expected to see the launch of pilot “corridor-ready” shipments linking Mumbai, Jebel Ali, and important European ports.[29] The expansion of Gulf-led infrastructure will enhance the corridor’s economic credibility, which in turn will promote increased participation from the private sector.

C. Integration Phase (2028-2030)

Between 2028 and 2030, IMEC could transition from segmented projects into a coordinated trade-and-technology ecosystem. Improved maritime-rail interoperability across the Gulf and the wider Middle East is expected to reduce India-Europe transit times to approximately 12-14 days, compared with nearly 24 days today.[30] Concurrently, digital-trade corridors and green-energy exports will consolidate the Gulf’s position as IMEC’s central driver. By 2030, the corridor can realistically operate at partial capacity, linking India’s manufacturing base with Gulf logistics and European demand through a unified framework of energy, data, and transport networks.

Ultimately, 2026 to 2027 represents the decisive recovery window. If the Gulf maintains investment momentum and India-U.S. trade relations stabilize modestly, IMEC can re-emerge as a viable economic artery well before the decade’s end.

The Gulf Advantage: Deepening Industrial and Technological Benefits

IMEC was introduced as a joint effort, but it seems that the most significant advancements will come from leadership in the Gulf. The UAE and Saudi Arabia are positioned at the geographic center of the corridor, overseeing the maritime, industrial, and digital infrastructure crucial for its success. Their ability to transform connectivity into production provides a viable way to maintain IMEC’s progress, despite ongoing geopolitical tensions.[31]

A. Industrial Transformation

Both Gulf economies are integrating IMEC into their plans to diversify their economies. The UAE’s Operation 300bn industrial policy encourages advanced manufacturing, logistics innovation zones, and industries that support semiconductors.[32] Saudi Vision 2030 also puts a lot of emphasis on making transportation equipment, renewable energy technologies, and logistics services in Saudi Arabia.[33] Adding these national programs to IMEC will create new value chains, from precision engineering to AI-enabled logistics, based in Gulf industrial parks like Khalifa Industrial Zone Abu Dhabi (KIZAD) and King Abdullah Economic City.[34]

B. Technological Integration

IMEC’s digital pillar is a natural extension of Gulf investments in artificial intelligence (AI), data governance, and cloud infrastructure. The UAE’s Artificial Intelligence Strategy 2031 and Saudi Arabia’s National Strategy for Data and AI both emphasize data sovereignty and cross-border digital trade.[35] By establishing corridor-linked hyperscale data centers, smart-port systems, and AI logistics platforms, Gulf countries can become the digital backbone of IMEC, processing regional trade information and optimizing supply-chain routes.[36] Such innovation will also attract foreign tech firms seeking secure, centrally located data infrastructure between Asia and Europe.

C. Green-Energy Leadership

Energy remains the Gulf’s comparative advantage. IMEC’s green-hydrogen and clean-ammonia transport corridors enable the UAE and Saudi Arabia to evolve from fossil exporters into renewable-energy hubs. Pilot projects at NEOM, Al Dhafra, and Khalifa Port already demonstrate scalable hydrogen production linked to European and Indian demand.[37] Standardizing certification and storage across IMEC’s ports could create an integrated “green-energy highway,” reinforcing the Gulf’s role in global decarbonization efforts.

D. Financial and Strategic Leverage

Sovereign wealth funds—including the Public Investment Fund (PIF), Mubadala Investment Company, and Abu Dhabi Developmental Holding Company (ADQ)—are positioned to anchor corridor financing.[38] Through joint ventures with European and Asian partners, they can structure political-risk-insured investment vehicles that attract private capital while ensuring Gulf ownership of strategic infrastructure. Such financial leadership transforms the region from a funding recipient to a global investor, shaping standards, sustainability, and governance norms.

E. Outcome: From Transit to Transformation

By embedding industrial production, digital infrastructure, and clean-energy logistics into IMEC’s framework, the Gulf will shift from being a transit corridor to becoming a production and innovation ecosystem. This transformation strengthens national economic security, diversifies revenue, and positions the region as the indispensable link between India’s manufacturing base and Europe’s consumer markets. In effect, the UAE and Saudi Arabia will define IMEC not merely as a trade route but as a regional industrial renaissance aligned with their long-term visions for sustainable growth.

Challenges and Constraints

IMEC faces structural and political challenges that continue to limit its ability to progress from announcement to implementation. These challenges expose the tension between the corridor’s ambitious geopolitical vision and the uneven realities of regional coordination.

A. Political Volatility

Persistent instability in parts of the Levant and the Red Sea continues to overshadow IMEC’s northern route. Fluctuating regional alliances and unresolved conflicts make long-term infrastructure investment risky, reinforcing the perception that IMEC’s success depends more on Gulf stability than on wider regional cohesion.[39]

B. Trade Frictions

The tariff confrontation between India and the United States illustrates how quickly domestic politics can undermine transnational projects. The corridor’s future remains tied to shifts in U.S. trade policy and India’s strategy of balancing autonomy with Western partnerships.[40]

C. Financial Risk

Fluctuating global energy prices and high interest rates pose financing challenges, particularly for long-term infrastructure with slow payback periods.[41]

Mitigation: Leverage sovereign wealth funds (PIF, Mubadala, ADQ) to co-invest alongside international lenders, ensuring liquidity and regional ownership. Establishing Public-Private Partnerships (PPPs) with risk-sharing frameworks can further attract foreign capital.[42]

D. Technological and Regulatory Risk

Without standardized regulations, IMEC’s digital and transport systems could face interoperability problems, leading to inefficiencies and cybersecurity vulnerabilities.[43]

Mitigation: Create a Gulf Standards Forum for IMEC, harmonizing data-sharing protocols, green-fuel standards, and customs digitalization. This forum would enhance regional coordination and reduce operational bottlenecks.[44]

Conclusion

The India-Middle East-Europe Economic Corridor (IMEC) was launched as a symbol of international collaboration, with the goal of connecting Asia, the Gulf, and Europe via infrastructure, energy, and digital networks. The trajectory of the past two years illustrates the vulnerability of multilateral initiatives in the face of trade conflicts, regional unrest, and shifting political alliances. The tariff crisis between India and the U.S. in 2025 highlighted how swiftly economic uncertainty can replace strategic optimism.[45] The IMEC vision remains achievable, provided that recovery efforts are practical, incremental, and rooted in the region.

This study shows that the resurgence of IMEC will be led by the Gulf, not by Washington or New Delhi. The UAE and Saudi Arabia possess the financial resources and political stability necessary to advance the corridor, as they are at the forefront of green energy, digital innovation, and industrial diversification.[46] IMEC’s objectives align with their current infrastructure initiatives, Operation 300bn and Vision 2030. Real progress can still be achieved, despite challenges in other aspects of diplomacy.[47]

[1] Atlantic Council, The India-Middle East-Europe Economic Corridor: Connectivity in an Era of Geopolitical Uncertainty (Washington, DC: Atlantic Council, 2024).

[2] European Council on Foreign Relations (ECFR), The Infinite Connection: How to Make the India-Middle East-Europe Economic Corridor Happen (Brussels: ECFR, 2024).

[3] “Trump Imposes Additional 25 Percent Tariff on Indian Goods, Relations Hit New Low,” Reuters, August 6, 2025, https://www.reuters.com/world/india/trump-imposes-additional-25-tariff-indian-goods-relations-hit-new-low-2025-08-06/.

[4] European Council on Foreign Relations (ECFR), The Infinite Connection: How to Make the India-Middle East-Europe Economic Corridor Happen.

[5] Brookings Institution, Connectivity and Competition: The Strategic Logic of IMEC (Washington, DC: Brookings Institution, 2024).

[6] Atlantic Council, The India–Middle East–Europe Economic Corridor: Connectivity in an Era of Geopolitical Uncertainty (Washington, DC: Atlantic Council, 2024).

[7] “Trump Imposes Additional 25 Percent Tariff on Indian Goods, Relations Hit New Low,” Reuters, August 6, 2025, https://www.reuters.com/world/india/trump-imposes-additional-25-tariff-indian-goods-relations-hit-new-low-2025-08-06/.

[8] Ibid.

[9] Ibid.

[10] Council on Foreign Relations (CFR), “Will Trump’s India Tariffs Affect a Critical U.S.–India Partnership?” CFR Backgrounder (New York: Council on Foreign Relations, 2025).

[11] Lowy Institute, “India–U.S. Relations Demonstrate Fickle Foreign Policies but Sticky Interests,” Interpreter Blog (Sydney: Lowy Institute, 2025).

[12] “Amid Tariff Rift, India–U.S. Military Exercise Begins in Alaska with Focus on High-Altitude and Counter-Drone Warfare,” The Economic Times, October 2025.

[13] World Economic Forum (WEF), “These Five Megatrends Will Shape the Future of the Gulf and Arab World,” World Economic Forum Insight Report (Geneva: WEF, 2024).

[14] KPMG Middle East, Unlocking Diversification in the GCC States (Dubai: KPMG, 2024), 14–16.

[15] Brookings Institution, Connectivity and Competition: The Strategic Logic of IMEC.

[16] UAE Ministry of Economy, UAE-India Comprehensive Economic Partnership Agreement: Implementation Guide (Abu Dhabi: MoE, 2024).

[17] European Council on Foreign Relations (ECFR), The Infinite Connection: How to Make the India-Middle East-Europe Economic Corridor Happen, 10.

[18] Council on Foreign Relations (CFR), “Will Trump’s India Tariffs Affect a Critical U.S.–India Partnership?”

[19] Atlantic Council, The India-Middle East-Europe Economic Corridor: Connectivity in an Era of Geopolitical Uncertainty (Washington, DC: Atlantic Council, 2024), 9.

[20] European Commission, Global Gateway: Connecting Europe to the World (Brussels: European Commission, 2024).

[21] KPMG Middle East, Unlocking Diversification in the GCC States, 15–18.

[22] European Council on Foreign Relations (ECFR), The Infinite Connection: How to Make the India-Middle East-Europe Economic Corridor Happen, 11.

[23] Council on Foreign Relations (CFR), “Will Trump’s India Tariffs Affect a Critical U.S.–India Partnership?”

[24] “India, U.S. Hold Trade Talks to Ease Tariff Dispute,” Reuters, October 13, 2025, https://www.reuters.com/world/india/india-us-hold-trade-talks-this-week-washington-source-says-2025-10-13/.

[25] KPMG Middle East, Unlocking Diversification in the GCC States.

[26] European Commission, Global Gateway: Connecting Europe to the World.

[27] UAE Ministry of Economy, UAE–India Comprehensive Economic Partnership Agreement: Implementation Guide (Abu Dhabi: MoE, 2024).

[28] World Economic Forum (WEF), “These Five Megatrends Will Shape the Future of the Gulf and Arab World.”

[29] Brookings Institution, Connectivity and Competition: The Strategic Logic of IMEC.

[30] Atlantic Council, The India–Middle East–Europe Economic Corridor: Connectivity in an Era of Geopolitical Uncertainty.

[31] Ibid.

[32] UAE Ministry of Industry and Advanced Technology, Operation 300bn Industrial Strategy (Abu Dhabi: MoIAT, 2024).

[33] Kingdom of Saudi Arabia, Vision 2030: Industrial Transformation and Investment Plan (Riyadh: Vision Realization Office, 2024).

[34] KPMG Middle East, Unlocking Diversification in the GCC States, 15–17.

[35] World Economic Forum (WEF), “AI Governance in the GCC States: Comparative Analysis of National AI Strategies,” WEF Insight Report (Geneva: WEF, 2024).

[36] Brookings Institution, Connectivity and Competition: The Strategic Logic of IMEC, 9.

[37] International Renewable Energy Agency (IRENA), Hydrogen Roadmap for the Gulf Region (Abu Dhabi: IRENA, 2024), 10–12.

[38] Emirates Policy Center, Sovereign Funds and Strategic Connectivity Investments in the Gulf (Abu Dhabi: EPC, 2024), 5.

[39] Atlantic Council, The India–Middle East–Europe Economic Corridor: Connectivity in an Era of Geopolitical Uncertainty, 13.

[40] Council on Foreign Relations (CFR), “Will Trump’s India Tariffs Affect a Critical U.S.–India Partnership?”

[41] World Bank, Global Economic Prospects 2025 (Washington, DC: World Bank, 2025), 22.

[42] Emirates Policy Center, Sovereign Funds and Strategic Connectivity Investments in the Gulf (Abu Dhabi: EPC, 2024), 6.

[43] Brookings Institution, Connectivity and Competition: The Strategic Logic of IMEC, 11.

[44] KPMG Middle East, Unlocking Diversification in the GCC States, 19.

[45] “Trump Imposes Additional 25 Percent Tariff on Indian Goods, Relations Hit New Low,” Reuters, August 6, 2025, https://www.reuters.com/world/india/trump-imposes-additional-25-tariff-indian-goods-relations-hit-new-low-2025-08-06/

[46] Atlantic Council, The India–Middle East–Europe Economic Corridor: Connectivity in an Era of Geopolitical Uncertainty, 14.

[47] UAE Ministry of Industry and Advanced Technology, Operation 300bn Industrial Strategy (Abu Dhabi: MoIAT, 2024), 5; Kingdom of Saudi Arabia, Vision 2030: Industrial Transformation and Investment Plan (Riyadh: Vision Realization Office, 2024), 9.