Time to Support Private Port Infrastructure in India, Amid Changing Maritime Security Dynamics

The changing ownership of the major port asset across the key maritime trading hubs, highlights the fact that the Global port Industry is shaping up in line with the Geo Political Interest of the major World powers.  As the centre of power and money is gradually shifting or at least rebalancing from US and Europe to Asia, It’s the time for Indian Government to support Indian Industry in key strategic areas for securing National Interest and helping Indian Corporates in becoming Global Players for balancing and preventing the shift of power and influence in favour of any one country.  

Port assets are one such critical Infrastructure which are usage neutral. It can be used for trading as well as for docking Military Vessels. In the last ten years, under the Belt and Road Initiatives Chinese dominance on the global trading network has emerged as a strong force. It is emerging as a sort of monopoly on the major Global shipping route as the significant numbers of world key trading ports have been acquired by few states run Chinese companies. If the Global economy recovers, these ports assets will be one of the major beneficiaries of the increased trade volume and will support the Chinese GDP. On the other hand, it will help the Chinese Navy in strengthening its maritime power.

India has an advantageous and extensive coastline of approx. 7,517 kms with 12 major and over 205 non major ports across nine maritime states.  These ports handle approximately 95% of foreign trade by volume, however most of them are not being used to their full potential due to infrastructure and connectivity issues. In terms of maritime capabilities, as India is consistently being outperformed by its Asian neighbours, Government need to contemplate and review how to facilitate promotion and expansion of Indian Companies footprints in the global Port and container terminal operations.

China Merchants Port Holdings Company has a huge portfolio of port network,  spanning 41 ports ownership/lease entitlement in 25 countries. It is a state-owned enterprise under the direct supervision of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC). SASAC performs the responsibilities assigned to it by the Chinese Communist Party. In year 2000, China Merchants Group and its subsidiary China Merchants Bank, were included in the Fortune 500 list, making China Merchants Group the enterprise with two Fortune 500 companies.

Apart from assets in Mainland China, HK and Taiwan, it has large portfolio of overseas ports and terminal, which includes interest from Asia to Europe through Africa. It owns Hambantota International Port & Colombo International Container Terminals in Srilanka, Tin-can Island Container Terminal Limited in Nigeria, Lome Container Terminal in Togo, which is one of the natural deep-water ports in West and Central Africa, serving as a transhipment hub for West Africa. It has ownership interest in Kumport Terminal in Turkey, which is the third largest marine terminal in Turkey and strategically located on the European Side of Istanbul. Further it has 49% interest in Terminal Link, which operates a global network of container terminals and stevedores and has port and terminal assets in United States, France, Greece, Belgium, Morocco, Malta, Ivory Coast, South Korea, Jamaica, Ukraine, Vietnam, Rotterdam, Iraq, Singapore, Thailand.

Following the financial crises, Greece joined China’s Belt and Road Initiative and this Strategic partnership lead acquisition of majority stake in Piraeus port by COSCO Shipping International, (a leading Chinese shipping services company). This allowed Beijing access to one of the largest ports in the Mediterranean, close to the international trade routes. The port is Global trade hub as its the only European port in the East Mediterranean which has the required infrastructure for the accommodation of transhipment cargo, at the crossroads of  major continents i.e. Asia,  Africa & Europe.

At some point of time in future, changed ownership structure of global ports and container business may immerge as a point of concern for India, as it may lead to monopolisation of International Shipping routes. The changing maritime dynamics makes it imperative for the Indian Government to promote port industry and encourage key Indian Players for acquiring the strategic global assets. This may be done by promoting and building, a sound financial and strategic support ecosystem.

Recently Parliament passed the Major Port Authorities Bill.  It is transformative as it seeks to promote the expansion of port infrastructure and facilitate trade and commerce. The Bill intend to transform the governance model of the ports in line with the successful global practice for facilitating ease of doing business by  bringing transparency and efficiency in operations of Major. Since Indian Government has announced its intention to gradually move out of its non-core Businesses, it’s the time for the Government to focus on supporting Indian Corporates by opening the new markets and avenues for Indian Inc. Supporting Indian Ports player in attaining global reach can be a win-win situation for the country, as it may not only help in scaling Global foot prints of Indian businesses but may also help the country in arresting the influence of our adversaries. We have to be sensitive about the fact that our neighbours are already on the spree to monopolise the global shipping route by acquiring and controlling the major trading hubs on these routes.

Further with the melting of Arctic Ice and opening of North Western passage, their would-be tectonic shift in the shipping routes of the future. The changes in the future routes caused by the opening of the North Western passage and the cost arbitrage associated with it, will have direct bearing on the competitiveness of Indian Industries and Atmanirbhar Bharat Mission. It’s the time we need to contemplate on the long-term economic interest of the country, and strategically support our private port players in championing the cause of nation building.

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