Aug 14, 2024 09:14 PM IST
Does port ownership matter? Yes. International trade takes the shipping route for 95% of cargo volumes.
In the 1980s, the Indian and Chinese economies operated at comparable levels. Indira Gandhi had come back to power, bringing political stability. After her assassination, Rajiv Gandhi rose to power, charming the nation but failing in performance. Then, the VP Singh-Chandra Shekhar days of political manipulation and instability followed. All this while, in China, Deng Xiaoping was working on his black-or-white, cat-must-catch-mice reforms. In the race started in 1990, China has moved far ahead, with a Gross Domestic Product (GDP) five times India’s.
The economic muscle from strong manufacturing and export orientation helped China acquire diplomatic success. One strategy was to invest in infrastructure abroad and buy the loyalty of the destination countries. Ports in the Indian Ocean rim were easy targets, with cash-strapped but ambitious host countries. Hambantota in Sri Lanka and Gwadar in Pakistan are prime instances. There are ports/terminals in Bangladesh, Myanmar, Kenya, Tanzania, Australia, and the United Arab Emirates (UAE), where Chinese companies are debt/equity financiers, contractors or concession-holding lessees. They have not come to India for want of security clearance from the Centre.
Then came the Belt and Road Initiative (BRI). The Belt is for transportation through rail and road networks through land-locked countries. And the Road revives the old Maritime Silk Road. The New International Land-Sea Trade Corridor claims to have expanded its reach to 523 ports in 124 countries and regions. The parallel development of the China–Europe Railway Express, which operates through a network of railways that traverse Asia and Europe, provides an alternative to the maritime route.
While the Chinese economy leapfrogged starting in the 1990s, India was making slow and steady progress towards liberalising its economy. Our usual excuses for soft governance, like democracy, labour protection, the rule of law, and human rights, and exaggerated official claims of growth, have served to make the masses content. The ascent of Indian professionals to top positions in global companies has made us proud. Our external migration is, in a way, the supply of human capital to the developed world. But what about investment?
India made an early attempt to invest in infrastructure abroad by taking up Chabahar Port in Iran. The challenge was to develop the port circumventing the sanctions imposed on Iran by the international community — the United States (US) strongly and continuously, followed by the European Union and the United Kingdom, and occasionally by the United Nations. India had to dilly-dally on Chabahar, without honouring the commitments made to Iran. Just 76 nautical miles away, China was developing the Gwadar Port in Pakistan. India has finally settled the Chabahar issue, with India Ports Global, a public entity, taking over the management.
The India-Middle East-Europe Economic Corridor (IMEC) declared at the G20 Summit in New Delhi is an effort to boost connectivity and economic integration between South Asia, the Middle East, and Europe. In addition to India, the UAE, Saudi Arabia, Israel, and Greece have identified roles in developing this economic corridor. The Israel-Hamas conflict has affected these plans.
The Adani Group has ventured substantially into infrastructure, especially port development, in various countries. India’s exim container trans-shipment is mainly through Colombo Port, where China has developed the southern terminal. Adani has nearly completed the first phase of work on the Vizhinjam Container Trans-shipment Port, which can handle Indian containers in a big way. Furthermore, the Adani Group is developing the Colombo Terminal with an investment of about $700 million, directly taking on China’s Colombo International Container Terminal (CICT).
In Australia, while Chinese interests have obtained 98/99 years leases for the ports of Newcastle and Darwin, the Adani Group has secured the Abbot Point Coal Terminal in North Queensland. A Chinese company has a port in Haifa Bay in Israel; now, the Adani Group has taken over the original Haifa Port. Adani has entered Africa through the Dar es-Salaam Port in Tanzania. The group has plans for various other countries including Kenya, Vietnam, Bangladesh and Myanmar, not only in ports but also in sectors such as renewable energy and airports.
In most of these projects, there are conflicts of interest between China and India; these cannot be brushed aside as commercial competition — there are geopolitical and strategic factors as well. And the Adani Group has faced protests in several places; it would be naïve to believe that these are well-intentioned actions with no vested interests. Many also believe that the Hindenburg report, which hit the Adani Group hard, had Chinese sponsors.
Does port ownership matter? Yes. International trade takes the shipping route for 95% of cargo volumes. While the ports are run professionally, political and diplomatic interests or counter-interests do emerge occasionally. There could be occasions when a strong Indian presence in other countries can improve the relations with the host countries — whether this presence is for infrastructure investment or influential individuals. The government’s own resources are limited; now that the Adani Group has shown the way, other Indian corporates in the infrastructure sector could also enter the fray and create more Indian footprints on the world infrastructure map.
K Mohandas is a former civil servant, who retired as secretary, ministry of shipping.The views expressed are personal
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