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India's Overseas Port Investments Sep 16, 2022, 16:50

Authors

Dikshu C. Kukreja
Dikshu C. Kukreja
Mr. V. Raman Kumar
Mr. V. Raman Kumar
Ms. Chandra Ganjoo
Ms. Chandra Ganjoo
Sanjay Bhatia
Sanjay Bhatia
Aprameya Radhakrishna
Aprameya Radhakrishna
Colin Shah
Colin Shah
Shri P.R. Aqeel Ahmed
Shri P.R. Aqeel Ahmed
Dr. Vidya Yeravdekar
Dr. Vidya Yeravdekar
Alok Kirloskar
Alok Kirloskar
Pragati Khare
Pragati Khare
Devang Mody
Devang Mody
Vinay Kalantri
Vinay Kalantri

India's Overseas Port Investments

India's Overseas Port Investments

Introduction
The Indian ports industry has a significant impact on national integration into the global economy and the country's economic and regional development. India has a long history of international maritime trade. In the coastal regions of India, ports play a significant economic role. India has 200 minor ports and 13 major ports, which handle 95% of India's international trade by volume and 68% by value. They also serve as a vital link between sea and land transportation. Multiple significant Indian ports have planned to modernise themselves over the coming years. Soon, with government initiatives like the 'Sagarmala' project, ports will develop into hubs of economic activity, in addition to becoming entry points for international trade.

Reason Behind Overseas Port Investments
In addition to developing local ports, investing in overseas ports has its own benefits. They act as facilitators of trade, and offer larger economic benefits such as useful information on logistics and the local economy. It also helps improve the maritime domain awareness of India. Investment in overseas ports provides strategic benefits since it tightens control over important sea routes and energy supply routes. It improves the bilateral relationship between the countries.

India having access to certain foreign ports for military and logistical support improves the security position of the country. The Gulf country of Oman has strong relations with India and allowed India access to the Duqm Port in Oman in 2018. The Gulf of Oman, the Indian Ocean, and the Arabian Sea are all accessible from the Port of Duqm. Access to this port has helped India engage other Gulf countries more easily, and expanded the country's military presence in the Indian Ocean.

Examples of Overseas Port Investments
The Government of India and Indian companies have invested in multiple overseas ports and formed partnerships with others. A few examples have been listed below.

  • Chabahar Port: The Indian government assumed control of the operations of a portion of the Shahid Beheshti Port, Chabahar, Iran, on December 24, 2018.
    • The port is Iran's sole deep-sea port with direct access to the ocean. India invested in the Chabahar Port to gain greater access to trade with Afghanistan and other Central Asian countries, thus reducing dependency on Pakistan's land routes. The port has the potential to grow into one of the most significant business centres in the region, as it is a crucial transit hub on the developing International North-South Transport Corridor. Additionally, Chabahar is one of the few regions in Iran that is not subject to American sanctions, which greatly streamlines international trade processes with other countries.
    • This was the first instance of India operating a port outside its borders. The ten-year formal contract for equipping and running the Chabahar Port was enforced on May 23, 2016.
    • On July 31, 2022, on the occasion of 'Chabahar Day', Minister of Ports, Shipping & Waterways, Mr. Sarbananda Sonowal, stated that the India-led port connection has given Central Asian nations safe and economically viable trade access to the Indian Ocean region, which will promote investment in the region. He also stated that post completion of Phase I of the project, the port's current 8.5 million tonne loading and unloading capacity will increase to 15 million tonnes.
  • Haifa Port: In July 2022, a partnership between Adani Ports and Special Economic Zone Ltd (APSEZ) and the Gadot Group in Israel won the lease to privatise Israel's second-largest port, the Port of Haifa, for US$ 1.18 billion.
    • The Haifa Port, which manages almost half of Israel's container freight, also serves as the country's primary port for cruise ships and passenger traffic.
    • This partnership gives India a significant presence in Israel. APSEZ plans to create strategic trade routes between its ports in India and Haifa in the near future to enhance trade between the two countries, diversify port cargo, and use its field expertise to improve operational effectiveness.
    • The port's purchase by Adani and Gadot is a significant move in light of the expanding ties between India and Israel.

  • Colombo Port's West International Container Terminal: On September 30, 2021, APSEZ signed an agreement to construct and operate the West Container Terminal (WCT) of the Port of Colombo, Sri Lanka.
    • As a member of the consortium chosen to carry out this assignment, APSEZ will collaborate with the Sri Lanka Ports Authority (SLPA) and John Keells Holdings PLC. A public-private partnership will be used to build, operate, and transfer the WCT for 35 years at a cost of US$ 700 million.
    • The project is anticipated to increase the WCT's ability to deal with containers. The Colombo Port is already the most popular regional gateway for the transshipment of Indian containers and mainline ship operators, with 45% of its transshipment volumes coming from or going to an Adani port terminal in India.
    • As a result of this agreement, the transshipment alternatives made available to various shipping routes and other potential port clients across South Asian waters will increase, benefiting both India and Sri Lanka.

  • Sittwe Port: India constructed the deepwater Sittwe Port in Myanmar in 2016.
    • The port was constructed as part of the Kaladan Multi Modal Transit Transport Project. This project will link Myanmar's Sittwe Port to the Myanmar-India border.
    • India and Myanmar together recognised this project as a means of developing a multimodal mode of transportation for cargo from the eastern ports of India to Myanmar. Additionally, it offers a vital strategic connection to the northeast, relieving pressure off the Siliguri Corridor.
    • The project intends to decrease the price and time of shipping items, including necessities, to the landlocked state of Mizoram.
  • Chattogram and Mongla Ports: In 2018, India and Bangladesh reached a bilateral agreement for the utilisation of the ports of Mongla and Chittagong in Bangladesh to promote transshipment.
    • To boost connectivity between India and Bangladesh, the two countries performed comprehensive tests for cargo transshipment to the northeastern states of India using the two ports.
    • To iron out any kinks and synchronise the immigration and customs procedures in both countries, both are arranging for at least four trial runs to the two ports in Bangladesh.
    • The use of the Chattogram and Mongla ports for transshipment will reduce the distance between Kolkata and major cities in northeastern states (currently at more than 1,200 km) to almost half.

Road Ahead
The development of India's economy depends heavily on shipping and ports. The Ministry of Ports, Shipping and Waterways utilises port modernisation, development of new ports, and investments in overseas ports to push the sector forward. By 2025, the cargo traffic at Indian ports is expected to reach 2,500 MMTPA. In order to meet the demands of increased traffic, a strategy has been created to increase the cargo handling capacity of Indian ports to more than 3,300 MMTPA by 2025. India's domestic development of ports and overseas operations of ports will work in tandem to propel India's maritime sector forward.

 

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