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Last updated: January 4, 2006 5:57 pm

India eases policy on Chinese investment

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India will consider more sympathetically Chinese bids to take part in developing the country’s infrastructure – a relaxation Indian shipping industry executives say has paved the way for Hong Kong-based Hutchison Port Holdings to participate in major container port projects in Mumbai and Chennai.

The world’s largest container-port operator’s original bid to win a role in a $270m container terminal development in Mumbai had been blocked by Indian defence and intelligence agencies worried about the security implications.

Sanjaya Baru, a senior advisor to Manmohan Singh, India’s prime minister, on Wednesday told the Financial Times that “India would welcome Chinese involvement in infrastructure development” but denied making a specific reference to Hutchison Ports, as cited in news agency reports.

Indian shipping industry executives said, however, that the government’s softer position on Chinese investment in India had already yielded results, with an effective reinstatement of Hutchison Ports Holdings and Taiwan’s Evergreen Marine as bidders to develop the Mumbai offshore container port.

“Hutchison Ports and Evergreen have got the green light to invest in Indian ports,” said one Indian executive.

A senior official at Mumbai Port Trust said it had not been officially informed of the turnround.

Hutchison Port, controlled by billionaire Li Ka-shing, said it had “never received any communications from the relevant authorities” about any security ban. “We are not aware of any restrictions being placed on our possible port investments in India.”  

Hutchison declined to comment on whether it would now bid for the Mumbai terminal project.

Others still in the race for the Mumbai project are PSA of Singapore and ULA, an Indian bidder. Mumbai Port Trust would provide one-third of the cost with the balance contributed by its private sector partner. 

Shipping sources say Hutchison Ports would now be in a position to reactivate its bid to develop a second container port in the southern city of Chennai, in conjunction with Larsen & Toubro, India’s largest engineering and company.

Mr Baru’s warmer tone on Chinese infrastructure investment comes after several years of hostility to potential Chinese investment.

“Hutchison Ports operates around the world and India needs such expertise and investment to relieve huge congestion at its ports,” says Divay Goel, director of Drewry, a shipping consultancy.

 

 

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