Arctic Geopolitics and Trade Realignment

23 Apr 2025

Arctic Geopolitics and Trade Realignment

The melting of Arctic ice is opening up the Northern Sea Route (NSR) , providing new opportunities in the region along with the threat to the environment.

Northern Sea Route (NSR)

The Northern Sea Route (NSR) is the shortest shipping route connecting Europe and the Asia-Pacific, spanning approximately 5,600 km through four Arctic seas.

  • Route Details: It begins at the Kara Strait, between the Barents and Kara Seas, and ends at the Bering Strait.
  • Benefits: The NSR can reduce transit distances by up to 50% compared to traditional routes like the Suez Canal, promoting faster cargo transit.

Arctic Geopolitics

Climate Impact and Changing Arctic Sea

  • Breaching of Climate Thresholds: In 2024, global temperatures temporarily exceeded the 1.5°C limit above pre-industrial levels, a possible long-term breach of the Paris Agreement goals.
  • Accelerated Ice Loss: Arctic sea ice is shrinking at a rate of 12.2% per decade (September data) compared to 1981–2010 averages as per NASA, signaling an urgent environmental transformation.
  • Climate Feedback on India: Arctic ice melt has cascading effects on India’s climate patterns, particularly the monsoon, with implications for agriculture and food security.
  • Opening of NSR : It is seen as a critical shortcut for shipping between Europe and Asia, potentially reshaping global trade flows.
    • It will allow faster cargo movement and reduce freight costs, posing strategic and economic advantages.

India’s Potential in the Arctic Region

  • Global Trade Realignments: Rising geopolitical tensions, especially with the U.S.-China friction is prompting nations to diversify trade routes.
    • The Arctic has emerged as a strategic alternative.

The Svalbard Treaty of 1920 

  • It is an international agreement that grants Norway sovereignty over the Svalbard archipelago, a group of islands in the Arctic Ocean, while ensuring equal access to the islands’ resources for all signatory nations. 

  • India’s Active Engagement: India has long-standing involvement with the Arctic, dating back to the Svalbard Treaty of 1920, and maintains a research base called Himadri, in the Arctic region.
  • Strategic Arctic Vision: India’s 2022 Arctic Policy aims to balance scientific research, climate awareness, and economic interests, with renewed focus needed for implementation.
  • Maritime Infrastructure Push: The 2025–26 Budget allocated $3 billion to maritime development, including shipbuilding clusters and ice-class vessels suited for Arctic navigation.
  • International Partnerships: India is engaging in dialogue with Arctic and non-Arctic states. The Arctic Circle India Forum in May 2025 could catalyze further collaboration and policy alignment.
  • Research and Capacity Building: India is investing in Arctic climate modeling and seeks to promote multilateral knowledge exchange and capacity-building initiatives.

Challenges in the Arctic Region

  • Ecological Fragility: The Arctic’s delicate environment is extremely vulnerable to disturbances, requiring India to prioritize low-impact operations in any commercial or research ventures.
  • Harsh Maritime Conditions: Navigating Arctic waters demands advanced, ice-class ships and significant preparedness due to unpredictable weather and challenging sea routes.
  • Strategic Alignment Dilemma: India must carefully navigate its Arctic alliances, balancing ties between Russia and Western powers without being drawn into China’s expanding Arctic ambitions.
  • Investment and Influence Gaps: High infrastructure costs and India’s non-claimant status in the region limit both its financial feasibility and diplomatic leverage in Arctic affairs.
Additional Reading: North Sea Route

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