China to build another port in Sri Lanka

NEW DELHI: First, it was Hambantota port in south Sri Lanka which went to the Chinese. Now, an ambitious programme to develop Colombo port has been given to another Chinese consortium.

The Sri Lankan cabinet recently decided to award the contract to build a new deep-water container terminal in Colombo port to a consortium consisting of China Merchant Holdings International and Aitken Spence. According to reports from the island nation, the terminal will be built by the same company that built the Hambantota port complex — China Harbour Engineering Company ( CHEC) and Sino Hydro Corporation.

No Indian company even bothered to bid for the project.
After Hambantota went to the Chinese and Indian strategists saw it as part of Beijing’s “string of pearls” strategy, it was believed that India would be more proactive when it came to strategic projects in its neighbourhood, where more than mere economic interests are at stake. But for the ADB-funded Colombo Port project, there were no Indian entities participating in the bids, leaving the Chinese consortium as the sole bidder for the terminal.

That when China’s engagement with Sri Lanka gets deeper. India is Sri Lanka’s biggest trading partner, but China is its biggest donor. In 2009, China gave about $1.2 billion to Sri Lanka.

When it is expanded, the Colombo port — which will become bigger than most Indian ports combined — will probably handle the bulk of Indian shipping traffic, making it more than important for India. Sri Lanka is positioning itself as a South Asia hub, which would work very well for India as it currently uses either Singapore or Dubai.

In fact, the Sri Lankan government has asked for bids for developing an industrial park in Hambantota. But so far, said sources, only a very small number of Indian companies have even expressed interest. Indian companies are getting into numerous sectors in Sri Lanka, but the headline grabbers remain the Chinese, adding to the perception that India is being “surrounded”.

While it is a fact that China, with its deep pockets and state-owned enterprises has been increasing its footprint in South Asia, it’s equally true that Indian entities are proving to be unequal to the challenge. Government and industry sources point to a number of reasons.

First, Indian companies venturing out in the neighbourhood are few because most of them are very risk-averse. They are also all private sector entities and not backed by India’s government might as in China. The government is also hesitant about pushing companies in other countries for fear of being tainted by corruption charges.

Second, countries like Sri Lanka are only now emerging from decades of strife. But whereas this is seen as a strategic opportunity for China, India is far slower off the mark. China also instinctively invests in projects where its presence/benevolence can be seen. In Sri Lanka, as in Bangladesh, Beijing has built much needed convention centres. India could actually be thinking cricket stadiums in Sri Lanka or cricket training academies in Bangladesh. But there is none of that fleet-footedness in New Delhi.

In countries like Nepal, where anti-India feeling is rife, Indian companies are finding that tenders are tailored in such a way so as to exclude Indian companies. In this way, Indian sources estimate that over 900 Indian companies have lost out in the past couple of years.

Third, and most important, the top levels of the government remain obsessed with Pakistan, neglecting the other countries in the neighbourhood. The PM, for instance, has only travelled to Bhutan. And there is no brainstorming between government and industry about Indian outreach in these countries and how the public and private sectors can complement each other’s efforts. – Indiatimes