A strategic and diplomatic exigency has presented two of India’s biggest state-owned ports with an opportunity to venture overseas for the first time.
Kndla porat, India’s biggest port by cargo handled—mostly dry and liquid bulk—and Jawaharlal Nehru port, or JN port, the country’s busiest container port, are all set to develop multi-purpose and container terminals, respectively, at Chabahar port in southwestern Iran.
Chabahar is an important port along the Makaran coast and offers Iran easy access to the Indian Ocean.
India has decided to invest some $100 million in developing Chabahar port, which is considered strategically and economically important for the country’s exports to landlocked Afghanistan.
Last week, a delegation led by shipping secretary Pradeep Kumar Sinha visited Chabahar port to take the proposal forward after it was cleared by the Indian cabinet.
India has been eying Chabahar port for nearly a decade to get easier access to Afghanistan.
India, Iran and Afghanistan have an agreement on preferential treatment and low tariffs for goods moved through Chabahar port, which also has a free trade and industrial zone in its vicinity.
The current move is also seen as a strategy to counter China’s recent takeover of the deep-sea port at Gwadar in south western Pakistan, which is some 72 nautical miles away from Chabahar.
Gwadar is a vital sea link for China to West Asia.
Given India’s often hostile relations with Pakistan, India views the Chabahar port as an alternative route not only to Afghanistan, but also to resource-rich Central Asia.
India’s bilateral trade with Iran stands at more than $15 billion (Rs.84,000 crore), of which Indian exports make up less than $3 billion.
If and when the plan materializes, it will be the first overseas investment by any of the 12 ports controlled by the Indian government.
India’s shipping ministry had proposed to set up an entity called Indian Ports Global for making overseas investments by India’s state-owned ports on the lines of global heavyweights such as Singapore’s PSA International Pte Ltd, Dubai’s DP World Ltd and Belgium’s Antwerp Port Authority, according to a 10-year plan unveiled in 2011. The plan, however, has not made any headway so far.
PSA is owned by Temasek Holdings Pte Ltd, the sovereign wealth fund of Singapore, while DP World is majority-owned by the Dubai government. Both have a large presence in India.
Antwerp port is 100% owned by the City of Antwerp. Antwerp Port Authority, which manages the port, has set up Port of Antwerp International, a vehicle to pursue development activities beyond Europe, particularly in growth regions. Port of Antwerp International has invested in Essar Ports Ltd, the entity that runs ports at Hazira, Vadinar and Paradip in India.
While PSA and DP World run container terminals worldwide, Antwerp port is mainly focused on managing ports overseas without any direct involvement in operating individual berths or terminals. Even at Antwerp port, cargo handling operations are outsourced to private specialists.
New Delhi maintains Chabahar port is in the common interest of India, Iran and Afghanistan, as well as Central Asia. Chabahar is also closer to India than the existing port at Bandar Abbas, which is about 380 nautical miles away from Chabahar.
Circumventing Pakistan, Chabahar port can serve as India’s entry point to Afghanistan, Central Asia and beyond. The port can be connected to the Zaranj-Delaram road in Afghanistan’s Nimroz province via Milak, built with India’s assistance.
Chabahar will provide Kandla and JN ports the opportunity to develop cargo terminals without any of the restrictions they face at home, where private firms are increasingly being tapped to construct and run facilities.
The investment in Chabahar will in all probability be routed through a company in which Kandla and JN ports, which operate as trusts in India, would hold equity stakes.
Kandla and JN ports should seize the opportunity to at least make a beginning on the global stage, which can be leveraged for a larger role later on.
Globally, government-owned ports are seeking investment opportunities overseas to forge stronger commercial links between maritime regions that have the potential to generate cargo for their own ports. So, clearly, the aim is to attract more cargo.
This strategy is based on the premise that more cargo would mean more ships calling at ports, creating more employment opportunities—both direct and indirect—for locals.
Secondly, it would mean having strategic control over logistics of key raw materials.
Kandla and JN ports have cash surpluses, a part of which can be deployed to develop port assets abroad and expand their businesses. These two entities can even sell tax-free bonds by tapping a low-cost fund-raising plan for infrastructure development announced in India’s annual budget for 2013-14 to finance overseas investment.
India’s private business groups such as Adani group and GVK group have already bought port assets abroad, mainly in Australia, as part of a larger plan to invest in coal mines and related infrastructure in that country.
It’s time for India’s state-owned ports to follow in their footsteps.
Source:-www.livemint.com
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