Renault hires Logan creator to devise low-cost car plan in India
Fortis to sell 64% stake in Aussie co Dental Corp to Bupa

Corporate Dec 17, 2012

Male ire on GMR project: Is there a China angle to it?

By Rajesh Pandathil

The Maldivian government has cited national interest as a reason for scrapping GMR's airport project in the scenic island country.

Is it on national interest or on a Chinese interest? There are indications that it could rather be the latter, given the Communist country's keenness on having a foothold in the Indian Ocean.

A recent indication of the Chinese interest in the Indian Ocean is its Defence Minister General Liang Guanglie's extensive tour of Sri Lanka in September.

Reuters

During his visit, he doled out $100 million to Sri Lanka to improve their military's "infrastructure and logistics equipment", according to a Washington Times report.

He even conducted impromptu class at Sri Lanka's National Defense University.

China has invested heavily in setting up military bases and naval ports in Sri Lanka, the report says.

China may even be keen on a possible presence of People's Liberation Army there. The move is aimed at essentially challenging India's dominance in the Indian Ocean, the report said.

Returning to l'affaire GMR, a report in Outlook magazine over the weekend quotes pro-India politicians there as as saying that the step has been taken at the insistence of a pro-China lobby in the government.

According to the unnamed inside sources quoted in the report, a few elements in the Maldivian government want to push out the Indian company and rope in a Chinese firm instead.

Chinese companies are also eyeing the Gan International Airport in Addu Atoll in the Maldives and another one closer to the borders on Lakshadweep.

The mutual distrust between India and China has been growing in the Maldives. Much to the chagrin of the Indian government, the Maldivian government had allotted a key plot of land near the Indian High Commission in Male to China, the Outlook report says.

The Chinese government is planning to build its embassy there.

Another view is that the GMR issue has been raked up with an eye to gain political mileage by the Mohammed Waheed Hassan government. The elections are due in 2013.

Hassan had removed former President Mohamed Nasheed in coup-like operation in February this year.

Whatever the reason is, it is an embarrassing situationfor GMR, which has been in the eye of a storm in India after the Comptroller and Auditor General'sscathing report that questioned the "undue favours" shown to the company.

It has already invested $250 million in the $500 million Maldives project.

The only hope for the company seems to be a speedier arbitration in Singapore, which it has already sought.

by Rajesh Pandathil

Related Stories.