India - India to Extend Global Influence with State-Owned Ports Company08 Jul 2011 • by Natalie Aster
The Indian government is planning to set up a state-owned ports company to act as a vehicle to acquire foreign ports and container terminals. The motivation behind this move is to facilitate the nation's trade and spread India's influence beyond its own borders. BMI notes that the government's efforts are somewhat slow compared with Indian private companies, which have already begun investing overseas.
Indian Ports Global will be modelled on Dubai-based DP World and Singapore-based company PSA International. The company will be established by government-owned Indian ports all contributing a certain amount, and this will be leveraged to raise US$557mn through the issuance of tax-free bonds. A ministry of shipping official stated: 'The finance ministry has given consent to us to authorise any entity to raise the bonds. We feel India Port Global is the best choice.'
BMI notes that around 90% of India's trade is seaborne, so acquiring strategic port facilities around the world could be a boon for the country. If the plan is successful, it could ease the flow of goods, not only of the commodities India needs to grow, but also its growing exports of manufactured goods. We forecast the total tonnage handled at the 13 primary Indian ports to grow to 837.1mn tonnes in 2015, and that total trade real growth will average a considerable 12.3% per annum over the mid term. Further, the port acquisitions could help India compete against Chinese's increasing sphere of influence; the Asian Dragon's 'string of pearls' ports are already dotted around the Indian Ocean in Burma, Pakistan, Sri Lanka and Bangladesh, much to India's annoyance.
The planned ports company will complement the expansion plan of state-controlled shipping company Shipping Corporation of India (SCI). The company caters for every type of shipping: container and dry and liquid bulk. Over the next decade SCI intends to enlarge its fleet by some 100 vessels in order to cope with the expected rise in imports and exports.
BMI notes that the state-controlled enterprise will lag somewhat behind advances already being made in foreign acquisitions by private companies. Owned by the Adani Group, the port of Mundra is India's largest private port, and set to handle the country's biggest throughput by 2013. Earlier in 2011 the port purchased the Abbot Point coal export terminal in Australia. The company now controls the supply line from its Galilee Mines to its Mundra power stations. Whether it be through government or private enterprise it seems certain that the Indian presence in overseas port facilities will grow in the coming years.
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