Chabahar is not the only port in which India is interested. Narayanganj in Bangladesh is also on the radar and India hopes to make progress on this project as well. Indeed, with China creating its string of pearls in the Indian Ocean and taking on itself the construction of a vital port in Sri Lanka in India's backyard, the need to be proactive in the construction of ports in areas of the country's influence has been accepted at all levels. The only surprise is why the powers that be felt that such agreements had to be tied up before a new government assumes office. Given the importance of the subject any government, but more especially one that has come to power on the promise to revive the moribund economy, is likely to pursue it with determination.
The problem will be not so much the political will as the absence of a suitable agency to implement such projects in different parts of the world. In spite of having a vibrant port industry in both the public and private sectors that handled more than 700 MT last year, India has had very little success in establishing and running ports outside the country. Some, like the Adani Group, have invested in port facilities in foreign countries, but not a single state-owned port has ventured beyond Indian shores. So who will construct and run the ports that the Indian government negotiates with friendly powers in the neighbourhood and beyond?
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The reluctance of Indian port owners to invest in facilities abroad is more than a little strange. After all ports in Mumbai, Kolkata and Chennai were established more than 100 years ago and, while a bloated labour force and some obsolete practices have dented some of their shine, the experience gained in running 12 (now 13) major ports all over peninsular India has given this country an edge over most others in offering consultancy in port-related matters. Efficiency levels in handling all sorts of cargo - container, bulk and liquid - in Indian ports are more or less on a par with international standards. Indian operatives are employed at all levels of work in international port companies with great distinction and, arguably, the experience of setting up and running port facilities in India is far more relevant to countries in the neighbourhood than expertise from western countries, which function in an entirely different environment. When you can establish steel plants in Europe and take over car companies in the UK, running a port in a neighbouring country should be a breeze.
One factor that has inhibited major ports from making a foray into investment in foreign ports is the absence of an appropriate institutional mechanism for making such investments. Except for Ennore Port, all other major ports are Trusts under the Major Port Trusts Act. For a Trust, subject not only to rules guiding Trusts under different Acts but also to the somewhat restrictive provisions of the Major Port Trusts Act, to venture into the unknown terrain of foreign direct investment is virtually impossible. You need a more user-friendly organisation that is flexible and better equipped to take quick decisions.
Strangely enough, moves to establish such an organisation that were put in place quite some time ago were ultimately given a quiet burial. The idea was that all major ports would together form a new company either by themselves or in partnership with a technically and financially competent private party to bid for port projects within and outside the country. The new entity would be a company under the Companies Act with its equity contributed either by the major ports by themselves or in partnership with a private entity. Since there would be no equity from the government, it would not be a government company and hence not subject to all the controls applicable to such companies deemed by courts all over the country to be the state. It would not, therefore, have to follow government policies on language or reservation nor have to appear before committees of Parliament for periodic quizzing. In other words, it would be allowed to buy a new English typewriter without having to find out if it had an equal number of Hindi typewriters. The presence of a private party with expertise in the field would provide added muscle by initiating the new company into the intricacies of the big bad world of international business, a challenge that government bodies, accustomed to functioning in a relatively protected environment, usually face when venturing outside their comfort zone.
Sadly, this new venture was never allowed to go beyond the drawing board. For reasons that were never made absolutely clear, the idea was shot down in the corridors of North Block and a change in guard in the ministry of shipping ensured that there was no spirited follow-up of what was an excellent investment proposal. The irony is that even a small country like the Philippines, which has no real history of port development, boasts of a company that bids for port projects all over the world. It has even bid for projects in India. But major ports in India with a history that goes back more than 100 years do not bid for any projects. These ports sit on accumulated reserves of about Rs 1,200 crores which, instead of being ploughed back into port development, are almost entirely invested in fixed deposits with nationalised banks. So both from the point of view of expertise and of financial muscle, this was an idea whose time had come.
That time has still not passed. The new government must take the first opportunity it gets to re-visit the entire issue and revive it. If the old colonial powers realised that their empires came to them through trade routes and agencies like the East India Company, newly rising economies must accept that while they are not interested in acquiring colonies, their power and status in the international community depend quite extensively on the economic muscle earned by strong, well-run companies that can compete on equal terms in the international market.
The writer is a former Secretary for Shipping