Adani is competing with China as the country’s global ambitions took a beating after the pandemic and due to geopolitical reasons. Adani is developing a terminal at Colombo port where China already runs one. Adani’s investment is seen as a counter to the stranglehold China gained over Sri Lanka with its debt traps over the years.
In a development that underscores the huge strategic significance of Adani’s global business, the US is investing more than half a billion dollars in a port terminal in Sri Lanka’s capital being developed by Adani. The financing by the American government’s International Development Finance Corporation (DFC) is being seen as the US backing Indian interests in Sri Lanka to curtail China’s influence in South Asia. This is the biggest investment so far in Asia by the DFC.
The American backing for Adani’s business will also boost the image of the company which is still struggling from the attack by American short seller Hindenburg, which had accused it of corporate fraud early this year.
An astute businessman who did not go to college, Adani spotted his chance in India’s focus on infrastructure and built big businesses in ports, airports, power and now cement. Adani told shareholders in July last year that he seeks a “broader expansion” beyond India’s borders with “several” foreign governments approaching his conglomerate to develop their infrastructure.
Adani’s Sri Lanka playAdani’s Sri Lanka play had begun long before the country’s economic collapse last year. In 2021, Adani sealed a deal with the state-owned Sri Lanka Ports Authority to develop and run the strategic Colombo Port’s Western Container Terminal. The $700 million Build-Operate-Transfer deal was the largest foreign investment ever in the port sector of the island nation. It was a rare example of Indian infrastructure investment in Sri Lanka, after Colombo in previous years pivoted to Beijing — which has funded everything from highways to ports through Belt and Road — and splurged on debt-fueled projects.
India is trying to tilt the balance in a strategic tussle with China in Sri Lanka, a pivotal battleground because it lies on key global shipping lanes and plays into New Delhi’s fear of encirclement from China.
Later, Sri Lanka scrapped Chinese solar projects on islands in the Palk Strait between India and Sri Lanka reportedly due to security concerns from New Delhi. In early 2022, Adani signed MoUs to build 500 megawatts of renewable energy projects in Pooneryn and Mannar, other northern districts close to India.
India “is worried about Chinese access to the Indian Ocean, and being encircled by Chinese friendly regimes in Pakistan, Sri Lanka and Bangladesh,” Katharine Adeney, a professor and expert on South Asian politics at the University of Nottingham, had told Bloomberg last year. Adani’s supplanting of China’s solar power projects represented “a strategic move and one that we are likely to see more of,” she had said.
Securing a foothold in Colombo’s new port is seen as particularly important for India, with China constructing the adjacent Colombo Port City, a Dubai-like financial hub, and operating the Colombo International Container Terminals Ltd.
India likely has a vested interest in having one of its own companies build a port terminal close to China’s own port project, Samantha Custer, director of policy analysis at AidData, a research unit at William & Mary University in Virginia, had told Bloomberg last year. Indian companies are often disadvantaged due to Beijing tying project finance to implementation by state-subsidized Chinese firms, she said.
Adani’s Haifa port
Adani also operates the Haifa Port in northern Israel along with a local company after it completed its purchase for $1.03 billion in January this year. Haifa is one of the main seaports in Israel, where about 99% of all goods move in and out of the country by sea. This too was seen as a move to curtail China’s influence. China’s Shanghai International Port Group already operates a port at Haifa.
Haifa is a major trade hub on the Mediterranean that gives access to European markets. It will boost trade lanes with the company’s Indian ports and could better connect Europe and the Middle East in the longer term.
Adani Ports had said that with the acquisition of Haifa port the company will expand its footprint into the European port sector, which includes the lucrative Mediterranean region. “In the short term, we look forward to developing strategic trade lanes between our ports in India and Haifa,” Adani Ports CEO Karan Adani had said. He added that the company anticipated Israel in the longer term becoming a connection both for Europe and the Middle East.
Haifa has now become an important component of the India-Middle East-Europe Economic Corridor (IMEEC). Announced on the sidelines of the G20 summit by several participating countries, the IMEEC will comprise two separate corridors, the east corridor connecting India to the Arabian Gulf and the northern corridor connecting the Arabian Gulf to Europe. It will include a railway which will provide a reliable and cost-effective cross-border ship-to-rail transit network to supplement existing maritime and road transport routes – enabling goods and services to transit to, from, and between India, the UAE, Saudi Arabia, Jordan, Israel, and Europe.
China got a port in Haifa in 2021 to strengthen its BRI project. Adani buying another port close by may not only boost India’s trade ambitions but actually prove to be a counter to the BRI as the IMEEC is being seen by many as a challenge to China’s BRI.
Adani’s Kerala port
Adani’s new port in Kerala at Vizhinjam too will help India compete with China in terms of both trade and manufacturing. Located near the southernmost tip of the country, the Vizhinjam transshipment container port — the first of its kind in India — will allow India to grab a bigger slice of the international maritime trade currently dominated by China.
(With inputs from agencies)