Home / Shipping News / Port News / New public procurement rules to hit Chinese crane suppliers to Indian ports

New public procurement rules to hit Chinese crane suppliers to Indian ports

Chinese dominance over the supply of cargo-handling cranes to Indian ports will be hit by the government’s decision late on Thursday to impose restrictions on vendors and service providers from countries with which it shares land border, in tenders for government procurement.

The order will also deter state-owned oil firms from hiring crude tankers owned by Chinese fleet owners for transporting oil to India under the so-called free-on-board (FOB) contracts wherein the responsibility for making the shipping arrangements rests with the buyer.

The rule, though, will be difficult to implement under the cost, insurance and freight (CIF) contracts, where the shipping part is finalised by the overseas suppliers.

India erects fresh barricade for Chinese companies; amends public procurement rules
“We are using Chinese-owned ships for just 2-3 per cent of our total requirements. Even this may have to be stopped,” said an official with one of the state-run oil refiners.

Shanghai Zhenhua Heavy Industries Co Ltd (ZPMC), the world’s largest port crane maker; Genma, a unit of Nantong Rainbow Heavy Machineries Co Ltd that makes mobile harbour cranes; Dalian Huarui Heavy Industry Group Co Ltd, the only supplier of Grab Type Ship Unloaders (GTSU) to Indian ports; and Sany Heavy Industry Co Ltd, the world’s third-largest maker of heavy equipment such as reach stackers, have a virtual monopoly over supply of cargo-handling gear to Indian ports.

“The government order will hit them very badly,” said the Managing Director of a port operating company.

India’s 12 ports owned by the Central government, private cargo terminals run by firms such as DP World and PSA International at these state-owned ports, and private ports run by entities such as Adani Ports and Special Economic Zone Ltd (APSEZ) have sourced most of their cranes from Chinese suppliers.

There are more than 250 Chinese-made cranes erected at ports across India.

New bidding rules
Bidders from countries sharing a land border with India will be eligible to bid in any procurement whether of goods, services (including consultancy services and non-consultancy services) or works (including turnkey projects) only if they are registered with the Competent Authority, which is the Registration Committee constituted by the Department for Promotion of Industry and Internal Trade (DPIIT).

Political and security clearance from the Ministries of External and Home Affairs respectively will be mandatory, according to the order.

The decision announced late on Thursday, to strengthen defence and national security, is applicable to autonomous bodies, Central Public Sector Enterprises (CPSEs) and Public Private Partnership (PPP) projects receiving financial support from the government or its undertakings.

Private players out of ambit
The government said the order will apply only to new tenders for public procurement. It will not apply to procurement by the private sector.

“The future is a big problem,” the Managing Director of the port operating company (quoted earlier) said. “But what about Chinese engineers for existing equipment installed at state-owned ports? Will Chinese engineers be given security clearance and be allowed to enter the sensitive port areas?” he said.

“Besides, many of the cranes are new and are under warranty and would require Chinese engineers to carry out routine operation and maintenance services. Plus, what about spare parts for existing cranes?” he asked.

Port operators will have to re-work their crane sourcing strategies and look at vendors such as US-based Terex Corporation, Finnish crane maker Cargotec OYJ, Italy’s Italgru S.r.l and Anupam-MHI Industries Ltd for their requirements, he added.

Anupam-MHI Industries is a joint venture between Anupam Industries Ltd and Japan’s Mitsubishi Heavy Industries Ltd.
Source: The Hindu Business Line

Recent Videos

Hellenic Shipping News Worldwide Online Daily Newspaper on Hellenic and International Shipping