India denies ban on Dubai, China and Pakistan terminal operators

Conflicting reports have emerged this week from India on whether the country will ban terminal operators from Dubai, Hong Kong, China and Pakistan over security concerns, but shipping ministry and Dubai Ports World officials have said the country has no such plans.

On Monday, the Economic Times, using an unnamed source, reported that India intends to summarily reject bids from terminal operators based in those four localities, a significant development considering three of the world's five biggest terminal operating companies come from Hong Kong, China and Dubai.

But on Wednesday, Indian Shipping Secretary A.P.V.N. Sarma told Bloomberg that the story was not true.

The Economic Times had reported on its front page on Monday that India has decided to bar companies from Dubai, Hong Kong, China and Pakistan from investing in its port projects, without saying where it got the information, Sarma said. As of now, we have no plan to impose any blanket ban on investments from a particular country. If such a ban were to come into effect, companies in those countries could stand to lose out on $8.5 billion worth of port projects designated by the Indian government under its 2006 maritime development plan. Of that amount, 90 percent is expected to come from foreign investment. The money is being sought for 250 projects to developed under public-private partnerships. More specifically, the decision could affect 10 projects currently out for bid. The ET story said 10 projects at the 12 ports the national government oversees will likely be rebid.

The decision is applicable for all facilities, including cargo handling, ground handling and other services, apart from infrastructure development, the report said. A joint decision to this effect has been taken by the ministries of defense, home affairs and shipping and department of industrial policy and promotion.

The worry, evidently, is coming from the military sections of India's government who are concerned that operators from those countries could make nearby naval bases vulnerable.

DP World, the Dubai-based terminal operating power, has been investing in India ever since it took over the terminals previously managed by P&O Ports, which it acquired in 2005. DP World's investments run deep and cover most of India's busiest container ports, including Nhava Sheva near Mumbai, Chennai, Cochin and Mundra. It has invested roughly $1.5 billion in India and has been building the country's first mega-container port, a transshipment terminal in Cochin.

DP World said it plans to continue its investment in India and said its current operations would be unaffected.

There is no threat to DP World operations in India and officials in the ministries of shipping, interior and transport are unaware of any new developments, DP World said in a statement to Emirates Business after the Economic Times report came out.

On Thursday, a DP World spokesperson told American Shipper: We have been advised by senior officials of the Ministry of Shipping in India that the (Economic Times) story is baseless and no such communication has been issued.

The situation in Dubai is far different from that in China, with relations cordial, but not likely to thaw in terms of allowing Chinese port development in India. India had banned Chinese and Pakistani involvement in ports before it opened up to foreign terminal operators in 1997. Hutchison Port Holdings, the Hong Kong-based terminal operator that handles more throughput than any other in the world, has long tried to enter the Indian market but has been rebuffed in recent attempts due to similar security concerns.