China’s presence in Kerala’s Vizhinjam seaport

ZPMC — which has provided 32 automated cranes and operating subsystems, which include software for container management — is a subsidiary of Chinese State-owned China Communications Construction Company.

On May 2, Prime Minister Narendra Modi commissioned the Vizhinjam International Seaport Limited (VISL), India’s first fully automated deep water transshipment port built at a cost Rs 8,867 crore. Fully owned by the Kerala government with support from Union government, the multi-purpose project has been executed by the Adani Ports and Special Economic Zone Limited.

While the state government envisages VISL as a gateway to Kerala’s economic transformation, what stands out is the marked ‘presence of China’.

ZPMC’s monopoly

All 32 fully automated cranes — eight rail mounted quay/ship-to-shore cranes that are used to load/unload containers from ships to docks, and 24 rail-mounted gantry/yard cranes — for the port operations have been provided by Shanghai Zhenhua Heavy Engineering Company Limited (ZPMC). Founded in 1992, it is a wholly-owned subsidiary of the State-owned enterprise China Communications Construction Company. Apart from the cranes, ZPMC has also supplied a comprehensive portfolio of terminal-related operating sub-systems to Vizhinjam that includes software for container management, and refrigeration, along with guaranteed spare parts and servicing.

With a presence in about 106 countries, ZPMC holds 70% market share in quay/ship-to-shore cranes. This even as competitors raised accusations of the company ripping off their designs that were later admitted by the company’s founder, Guan Tongxian.

The onset of the Belt and Road Initiative (BRI) significantly raised ZPMC’s profile. As infrastructure development became the kernel of the BRI, ZPMC’s stocks rose as the company claimed the presence of its equipment in 270 global ports.

Issues of surveillance

Last year, in a US Congressional probe, communication equipment on more than 200 ZPMC cranes in US ports were found to be not documented in contracts between the company and the ports, raising concerns of surveillance and/or sabotage. While the company denied these accusations, such vulnerability in the machinery poses questions for critical infrastructure and national security.

Interestingly, India had placed restrictions on ZPMC and its equipment at the Jawaharlal Nehru Port in Mumbai, in 2013. This was in line with the Union government’s 1997 policy to bar Chinese companies, or groups with connections to China, from participating in Indian port projects. It is worth remembering that a three-company consortium led by two Chinese companies had won a bid to develop Vizhinjam back in 2006, only to be denied security clearance by the Union government.

This move — which also extended to ports built by India outside its territorial jurisdiction — raised apprehensions from port concessionaires and developers on delays in meeting their targets, leading to the Ministry of Shipping urging security agencies to reconsider their stance. In fact, in February 2024, questions were raised in the Rajya Sabha on the use of more than 250 ZPMC cranes across different Indian ports by the end of 2020, which was admitted by the government, citing adherence to extant rules and guidelines by all operators.

In July 2020, the Union government put in place restrictions on public procurement from countries sharing a land border with India on the grounds of national security, and the rules applied to different entities, including public-private partnership projects receiving financial support from the government. Given that this applied in the case of Vizhinjam too, the argument put forth was that the orders by the Adani Ports to ZPMC dated to 2018, and, therefore, the restrictions did not carry a retrospective effect.

Further, the positive spin imparted to the narrative is the claim that Rs 334 crore were added to the exchequer as Goods and Services Tax through this procurement. Clearly, contradictions galore.

The Vizhinjam port once again illustrates the dominance of China in global port infrastructure, as competing non-Chinese companies lack the deep pockets to pose a challenge, and become dependable, attractive alternatives for developers-clients globally.

Benchmarking China

While ZPMC’s involvement may mark China’s ‘real-time presence’, the Chinese developmental model leaves it imprint ideationally too. In its budget for Financial Year 2024-2025, the Kerala government earmarked Vizhinjam on the lines of China’s Special Development Zones (SDZ) in the 1970s, primarily Shenzhen.

Proposed to be created in partnership with the private sector, attracting investment from non-resident Keralites is a path that China traversed in its early years of economic reform.

Yet, in spite of Beijing’s (large) imprint — real-time or ideationally — and a section of the political elite seeking to emulate the development model, India’s domestic political discourse continues its underwhelming engagement vis-à-vis China.

The Vizhinjam inauguration provides an opening for not only greater attention to China’s global presence but also serves as a reminder to improve India’s weight — in terms of resources, policies, and initiatives — to proportionately increase its punching power.

(Anand P Krishnan is Fellow, Centre of Excellence for Himalayan Studies, Shiv Nadar Institution of Eminence, Delhi NCR.)

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.