What
Gwadar can learn from India’s Mundra port
Pakistanis who want to see Gwadar reach
its true potential would do well to learn from Mundra’s success.
Uzair M. Younus Published August
25,
Located on the northern shores of the
Gulf of Kutch, the Mundra Port is the largest private port in India. Handling
almost 150 million tons a year, the port began operations in 1998 and is
operated by Adani Ports & SEZ Limited, whose CEO is Karan Adani.
Karan is the son of Gautam Adani, one of
the world’s richest men whose net worth is estimated to be almost $140 billion.
Mundra’s rise and the strategy followed by Indian policymakers, especially
Narendra Modi, first as Chief Minister of Gujarat and then as Prime Minister of
India, offers many lessons to Pakistani policymakers seeking to realise the
full potential of the Gwadar Port.
The modern era for the Mundra port dates
back to 1994 when the Gujarat Maritime Board (GMB) gave an approval for a
captive jetty. Four years later in 1998, the first terminal began operations
under the Gujarat Adani Port Limited and by the end of 1999, there were
multi-purpose berths operating at the port. Recognising the economic importance
of this facility, a private railway line was completed in 2001 and by the end
of 2002, this line was fully integrated with Indian Railways, allowing
efficient transportation of cargo to and from the port across India.
What began as a facility handling
commodity cargo — the port was handling crude oil by 2002 — became a Special
Economic Zone (SEZ) by 2003.
This SEZ was part of a broader strategy
to attract investment into the state of Gujarat through consistent policies
favouring domestic and foreign investors. A flagship annual event, titled Vibrant
Gujarat, was organised starting in 2003 (it continued until 2019) where
prospective investors, policymakers, and other business leaders explored
investment opportunities in the state.
The port’s growth soon led to the
development of a second terminal, increased supply of power through an
agreement with Tata Power, and growth in bulk cargo that was handled by the
port and in 2008, the port began handling automobile exports through an
agreement with Maruti Suzuki.
By 2007, less than a decade after operations
began, Mundra Port and Special Economic Zone Limited (MPSEZ) offered equity
shares to the Indian public. The shares were offered at about Rs100 per share
and the offering was oversubscribed by 116 times. Today, the entity is the largest private port operator in India
with 13 ports in the country, representing almost 25 per cent of the country’s
port capacity — the company also recently acquired Haifa Port in Israel for
$1.18 billion.
The Mundra Port now has almost two dozen
warehouses with a combined storage capacity of 137,000 square meters. These
facilities store wheat, rice, fertiliser, and other commodities. The port also
has wheat-cleaning and rice-sorting facilities, with a cumulative capacity to
handle over 1,700 tons of wheat and rice a day. It is also the world’s largest
coal importing terminal with a capacity to handle over 40 million tons of coal
a year. These coal imports are critical not only for India’s energy sector but
also for Adani, which operates coal mines in places like Australia and owns
coal power plants in India.
The foundations of success
The dramatic success of Mundra and the
Adani conglomerate is built on two key foundations — the consistency of policy
priorities, especially at the state government level, and the recognition that
the private sector is best placed to generate economic activity.
Gujarat had high levels of economic
growth through the 90s and this focus on economic development continues to this
day. Despite significant human development challenges related to childhood
malnutrition, literacy, etc, successive state governments have developed a set
of policies that prioritise economic opportunity at the local level.
Mundra’s success was built on this
priority, meaning that before the port could play a role in helping India’s
broader economic story, it had to have a positive impact on the people who
lived in the state of Gujarat.
The second priority focused on letting
private sector entrepreneurs mobilise resources, gain technical knowhow, and
take risks to build critical infrastructure and associated industries around
it. While the government offered investment incentives, tax breaks, and other
support, the onus on developing, growing, and scaling up Mundra Port was on the
Adani Group.
And while people may rightfully point to
crony capitalism as being the driver of this innovation, the fact of the matter
is that Gautam Adani became one of the world’s richest men through productive
investments, not just elite capture of state resources.
The fault with our port
These two core principles seem to be
missing as Pakistan seeks to build and scale Gwadar. The regular protests by the residents of
Gwadar, who have limited access to drinking water, and the broader
disenchantment of Baloch citizens is evidence that inclusive economic
opportunity through state-led investments remains a distant dream. The question
is: can a major port, that is unable to deliver for the people that live
closest to it, generate economic opportunity and wealth that benefits Pakistan
and its citizens?
Secondly, the thrust of the development
model being followed in Gwadar continues to be state driven where realities of the local economy are
ignored. For example, the core economic activity of Gwadar for centuries
has been fishing. Despite this obvious fact, not a lot of effort has been made
to mobilise private capital to modernise this fishing industry such that it
creates well-paying jobs for local citizens in industries affiliated with
seafood, combined with a special focus on exporting these products.
Finally, the lack of political stability
in Balochistan and the machinations that are the norm in Quetta, means that
there is little local ownership in terms of tackling the province’s chronic
economic and human development challenges. Over the last few days, the province
has been devastated by rains and flooding, but elites, mainstream media,
and citizens remain fixated on the political game of thrones being played out
in Islamabad.
The dramatic growth at Mundra Port, the
economic activity that it has generated in alignment with Gujarat’s own
developmental priorities, and India’s broader development trajectory, where it
has become more globally integrated, stands in stark contrast with ours.
Mundra as a case study offers key
lessons of how and why this divergence is taking place, especially as it
relates to mobilising private sector capital to achieve strategic economic
objectives.
Pakistanis who want to see Gwadar reach
its true potential would do well to learn from Mundra’s success and apply
similar strategies in Gwadar. https://www.dawn.com/news/1706574/what-gwadar-can-learn-from-indias-mundra-port
