Security concerns at India ports: It's acropolis now

Last Updated: Thu, Dec 13, 2012 21:25 hrs

Chinese workers atop a crane, at a strategic location like Mumbai Port, is bound to make India’s naval authorities nervy. No wonder, Gammon India Ltd’s 12-crane order from Shanghai Zhenhua Port Machinery Co Ltd (SZPMC) is facing security hurdles.

While the cranes are not a problem, the idea of allowing Chinese personnel on port premises for installation of the equipment has made the defence ministry wary. “There is an apprehension the Chinese workers might click pictures from the crane, which can interfere with national security,” a senior official told Business Standard.

Shanghai-based SZPMC is one of the world’s largest equipment manufacturers. “The government is apprehensive of signing long-term concession agreements with Chinese developers as it is difficult to monitor them. But they are the biggest suppliers of equipment the world over,” said Subhrarabinda Birabar, head of port sector, Gammon Infrastructure Projects Ltd.

  • ZPMC’s personnel face security hurdles for installing equipment at Mumbai Port
  • Kaidi Electric Power Company and China Harbour Engineering Company bid with Zoom Developers for Vizhinjam port cancelled
  • Hutchison denied security clearance for Chinese links at Jawaharlal Nehru Port Trust and Chennai Port

Though the government is trying to work out a solution, this is just an example of how India has grown increasingly anxious about Chinese involvement in its ports, a sector which assumes economic as well strategic importance. “What is it the Indian Navy is doing that is so secretive, and if it is, then why do it next to a commercial port? We have to change our attitudes and stop being paranoid,” said Michael Pinto, former shipping secretary.

There have been instances where Chinese investment in port development has met a negative response. Kerala’s Vizhinjam Port’s international trans-shipment terminal never began since the government denied security clearance to the winning bidders — a consortium of two Chinese companies, Kaidi Electric Power Co and China Harbour Engineering Co and Mumbai-based Zoom Developers — in August, 2006.

“It is ironic that most of our trans-shipment cargo is anyway being handled by the Chinese in Colombo port. China is building more port facilities in Sri Lanka,” said

K Mohandas, a former shipping secretary. While major ports are protected by the Central Industrial Security Force, custom officials, etc, the state ports need to be more watchful, he added.

Hong Kong-based Hutchison Port Holdings, one of the world’s leading port developers, has not been successful in bidding for port projects in Chennai and Mumbai (Jawaharlal Nehru Port) due to its Chinese connections. The company was a consortium partner with Larsen and Toubro in its bid for offshore container terminal in Mumbai port, and also for the second container terminal at Chennai port.

For both, the company was denied security clearance. Chinese companies, too, have taken the cue and stopped bidding for port projects in India. “Curbing Chinese participation is detrimental to competition. It is a big mistake. They can give us a better deal,” Pinto added.

The maritime sector aside, in 2010, intelligence agencies denied security clearance to Chinese telecommunications equipment manufacturers Huawei Technologies Co Ltd and UT Starcom to supply equipment to operators. Norms were relaxed when Mukesh Ambani-led Reliance Indutries Ltd sought visas for around 1,800 Chinese workers from China Petroleum International for laying a 1,400-km pipeline grid linking West Bengal with Kakinada in Andhra Pradesh to ferry gas from the Krishna-Godavari basin.

Globally, the United Arab Emirates-headquartered Dubai Port World had sparked controversy in the US when it acquired the British company, Peninsular and Oriental Steam Navigation (P&O), in February 2006. The acquisition gave DP World control of management contracts of six major ports in the US, which raised security concerns in the country. The matter ended with DP World selling P&O’s American operations to New York-based AIG Global Investment Group.

“Ports are protected areas. Chinese companies cannot participate as concessionaires. All the major global port developers are present in India including DP World, Port of Singapore, Louis Dreyfus, APM. There is a lot of competition in the space,” said Saket Agarwal, director, ABG Ports.

Besides, experts say security is not the only tight spot for Chinese investment, especially in sectors like power, telecom, etc. “Their quality is questionable. When Chinese product comes in, they undercut to such an extent that at one point competition becomes non-existent. Then they raise their prices,” an industry expert, who did not wish to be quoted said.

As Gammon Infrastructure awaits its cranes in the run-up to the launch of operations at the Indira Container Terminal at Mumbai Port by 2013-end, whether India is ready to click with its neighbor is yet to be seen.

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