Indian Economy: Growth -3

[Naresh]

[center]<b><span style='font-size:14pt;line-height:100%'>Companies from Dubai, Hong Kong, China, Pakistan may be barred from port projects</span></b> <!--emo&:clapping--><img src='style_emoticons/<#EMO_DIR#>/clap.gif' border='0' style='vertical-align:middle' alt='clap.gif' /><!--endemo-->[/center]

<b>NEW DELHI : <span style='color:red'>The government has decided to ban all companies from Dubai, Hong Kong, China and Pakistan from investing in port infrastructure projects in the country. Consequently, the ports and shipping ministry will reopen bids for at least 10 port projects. </span></b>

Although FDI proposals from these countries have been rejected earlier on a case-to-case basis, the government is now introducing a blanket ban on companies from these countries at the bidding stage itself. The country-specific ban will be introduced as part of the international bidding document. The move will impact investment plans of major port development companies like DP World and Hutchison in India.

Based on security threats to Indian naval bases, private players from Dubai, China, Hong Kong and Pakistan will no longer be permitted to invest in over 250 ports being developed on a public-private-partnership model in the country. According to government sources, this will be applicable for all facilities, including cargo handling, ground handling and other services, apart from infrastructure development. A joint decision to this effect has been taken by the ministries of defence, home affairs and shipping and department of industrial policy and promotion.

“The government allows 100 per cent FDI for port development, but there are about four countries that may not get the green signal from security agencies in the future. Since most of the ports are next to naval bases, it is possible for foreign companies to gather vital information on the day-to-day activities of Indian naval bases,” the official said.

This seems to have already taken shape in the case of the Ennore Port container terminal bids. Despite its expertise, DP World was surprisingly left out of the six shortlisted companies for the development of the terminal, which may have been due to security-related issues and Ennore’s proximity to major naval bases along the east coast.

The government currently allows 100 per cent FDI in port development. “Under the national maritime development policy, the government has invited investment worth Rs 34,000 crore from private players, 90 per cent of which is expected to come from FDI,” he said. The nine port projects that are at present being evaluated by the government and put under the scanner are worth more than Rs 5,000 crore.

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