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India uncertain about accepting Chinese bids for ports and ships

July 6, 2011

After the telecom and power sectors,  its hit the Indian ports and shipping sector now – India needs to ramp up its ports and shipping industry, and is soliciting bids from global companies,  is attracted by China’s efficiency and expertise at building ports as well as cheaper ships, but is weary of security concerns at its ports and key coastal areas for projects that will last atleast a few decades. India also feels threatened as China is building and will be managing and operating Pakistan’s largest port at Gwadar.

According to the Times of India, the shipping ministry plans to award 24 port expansion and capacity creation projects involving an investment of Rs 16,964 crore during the current financial year leading to a capacity creation of 232.43 million tonnes.  New Delhi has invited international bids for the expansion and capacity creation projects and companies including Dubai Port Global, Hutchison and Ningbo Port Group Ltd. have applied. “The port expansion projects would be through global tenders and everybody is free to apply. But there are security concerns with regard to companies from West Asia and China,” a senior government official, who did not wish to be identified, told TOI. He said port development provides long term access to a developer and there is an apprehension that the private players can map the entire area which can pose a threat to the country’s security.

In addition, Chinese firms are also emerging as the most saught after in the ship procurement sector due to price. Shipping Corporation of India (SCI) officials said that Chinese firms are getting more orders since their bids are the lowest. “We have no option than following the L1 (lowest bidder). Out of the 31 vessels on order by the SCI, 21 orders have gone to Chinese firms,” said a senior official. These 31 ships would cost at least Rs 5,100 crore. Senior ministry officials said there is a need to put check on the growing presence of Chinese players.

Lastly the same problems that plagued the telecom and power industries – that of insufficient domestic production (but need to give certain tenders to domestic companies) as well as veracity of quality of equipment are seen reserected here. The official added – if domestic players are not encouraged the country could face a crisis in building warships. “There is also another aspect. Most of the Chinese firms have come to existence only in the past five-six years and so the quality of their products is yet to be established.

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