National Security Current Affairs

Pakistan Leases Gwadar port to a State-run Chinese firm for 40 years

Pakistan has leased the operations of its strategic Gwadar port to a State-run Chinese firm, the China Overseas Port Holding Company (COPHC) for a period of 40 years. COPHC is slated to carry out all the developmental work on the port situated in the Balochistan province of Pakistan. COPHC took over the operations of the port in 2013. Previously, the control of the Gwadar port was with Singapore’s PSA (Port of Singapore Authority) International.

As per the contract, 91% share of revenue collection from gross revenue of terminal and marine operations as well as 85% share from gross revenue of free zone operation will go to the COPHC. The provinces will not be given any share in the revenue collection.

Gwadar Port is a warm-water, deep-sea port situated on the Arabian Sea at Gwadar in Balochistan province of Pakistan. It is located at the mouth of the Persian Gulf just outside the strategically important Strait of Hormuz. It features as the southern Pakistan hub of the $57 billion China-Pakistan Economic Corridor (CPEC) plan. It is considered as a vital link between the Chinese One Belt, One Road initiative and the Maritime Silk Road project.

Advantages for China

Gwadar offers China a shortest route to oil-rich West Asia and Africa. China can use the port to transport fuel into north-western China, by transporting oil and gas from the port through pipelines to China’s Xinjiang province. Having Gwadar under its command would change the security dynamics for China. As China’s oil imports increase, it would prefer to insulate its energy transports from the troubled waters of the Straits of Malacca and the South China Sea.

Implications for India

Gwadar port offers serious strategic implications for India. Gwadar provides China a key listening post to observe the Indian naval activities around the Persian Gulf and Gulf of Aden. The Gwadar port, if fully operationalised, will wean Pakistan away from near-total dependence on Karachi, which is much closer to India and hence within the Indian military’s strike range. Lease of Gwadar port also helps China to encircle India (String of Pearls) and gain strategic advantage in the region. India has apprehensions that these ports could be used for military purpose as well.

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Defence Ministry to relook at defence blacklist guidelines

The Union Defence Ministry is planning to relook at defence blacklist guidelines for dealing with global defence firms engaged in corruption in arms deals.

Thus, under recently released new policy called ‘Guidelines of the Ministry of Defence for penalties in business dealings with entities’ the Union Defence Ministry will “re-ascertain” the list of companies banned from doing business in India.

The blacklisting policy was approved by the Defence Acquisition Council (DAC) on November 7, 2016 and the policy was released by the Ministry on 21 November 2016.

Key Facts

  • The new policy has moved away from blanket banning of blacklisted firms which has adversely affected defence preparedness. Instead of ban, it imposes heavy penalties.
  • It has reduced the period of blanket ban to 5 years from 10 years. However the upper limit of the ban period has not been specified.
  • It allows doing business with a blacklisted firm for support of critical spares and maintenance in view of national security.
  • However, it will be through prior approval from the Defence Minister, i.e. the designated competent authority.

Why there is need to relook?

Many global defence firms have been banned from doing business in India because of allegations of corruption against them. However, blacklisting such firms has skewed the competition, with the Indian military not able to access many of the global products.

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