 Hello and welcome to NewsClick. NewsClick published a story written by Abeer Das Gupta and Paranjay Guha Thakurtha, which talked about how change in government's kabutaj policy might help a specific group, mainly Adani, and other private players and would be a death knell for the government-owned biggest port in India. To discuss more about the story, we are joined by one of the authors, Paranjay Guha Thakurtha. Welcome to NewsClick. Thank you Paranjay. So let's start with the Adani part first. Or should I start with the kabutaj part first? Okay, let's start with the kabutaj part first. It's important to explain what is kabutaj because this word doesn't, a lot of people don't understand what it is. Kabutaj is when you are transporting by ship goods from one port in the same country to another port in the same country. Now there are certain rules and certain laws and certain rules that exist in all such countries which have long coastlines, whether it be China, whether it be the United States. And it's important to draw a parallel between international shipping where anybody is free, whether it doesn't matter what your flag is. You can be an Indian ship owner, you can be a ship owner from some other part of the world. But kabutaj rules everywhere across the world are meant to protect the domestic industry and domestic ship owners. You know the analogy can be dropped between say, airline travel. Because if you are a foreign airline, you can't regularly operate flights within a particular country. There could be specific circumstances under which you did. So that's essentially the kabutaj rules. And what has happened is that the government has had these rules, they've been controversial, people have had different points of view and they've been relaxed by a new notification. So can you throw some light on that notification, how have they been relaxed? On the 21st of May, the Ministry of Shipping, Government of India, issued a notification that relaxed the restrictions on the movement of foreign ships that are engaged in transporting containers, either filled with goods or empty containers between and among Indian ports along the country's coastline. Now this is perhaps the single most important policy decision in the shipping industry taken by this government in the four years that it has been around. Now what is going to happen is that this is paving the way to tilt the balance from Indian ship owners to foreign ship owners and those Indian shipping companies who have close association with foreign shipping companies. It's also going to tilt the balance from government-owned ports to private-owned ports. Now the single biggest beneficiary of this move is going to be the Adani Group. Because not only does it have associations and partnerships with foreign shipping lines, it also is the single biggest owner of ports across the country from the West Coast to the East Coast. This is what I have described in the article, it's like a string of pearls. That's right. I've used the analogy from the Chinese analogy. The China doesn't agree with this analogy, but for geopolitical reasons and geopolitical reasons, this is a theory to describe how China has a strategy of developing port facilities across the cross, across the Chinese coast, South Asia, Colombo, West Asia, all the way up to Sudan in Africa. So can we say that this policy change has been brought specifically to help Mr. Adani because as you mentioned in the article in the previous regime, this was not there, right? You know, over the last several years, there's been a lot of flip-flops. There have been lobby groups, there's been the Indian National Shipowners Association. They issue no objection certificates. It's only when they issue no objection certificate that a foreign ship can transport goods from one port in India to another port in India. That is the INSAR, Indian National Shipowners Association, first ascertained whether an Indian-owned ship is available and only if it is not available will they give it to a foreign ship. Now this has completely been done away with, gradually over a period of time. Now what has happened is earlier there been a lot of debate, discussion whether it's good, not just for the country's economy, but also for the country's security interests because these Indian shipowners, they may be at a disadvantage, they may have to pay higher taxes, they may have to pay higher prices for fuel, their cost of credit from banks is higher, but they also employ more Indians. They employ more Indian seafarers and at the end of the day the Indian economy benefits, whereas a foreign ship owner is under no such obligation. So what has happened is that as the single largest operator of ports in the private sector, the Adani Group, it is going to be the biggest beneficiary. It at present directly controls the activities of nine ports that are located along both the west and the eastern coastlines, Mundra, Tuna-Tekra, that's one is an internal port, one is an XL, then you have the Hej-Hazira, all of these are in Gujarat, then you have Mohamogawa in Goa, then you have Enor and Kattupalli both in Tamil Nadu, then you have Vizag or Visakhapatnam in Andhra Pradesh and Dhamra in Orissa. But that's not all. This list is scheduled to go up because the Adani Group is currently building the Visingham port in Kerala. It is also being awarded the contract to build the Bhavan Paduport in Andhra Pradesh and it is proposed that it will build a port in West Bengal in Kulpi. So in a sense it will control ports all across the country, its entire coastline. So basically it's also going to hamper the Indian port agencies, port companies. When you talk about INSA, did INSA have any objection to this entire policy change? Absolutely. They have a dead opposed to it. And they said this is going to be exact words disastrous for the country's economy. And the letter that has been given by INSA, the opinion it earlier sought from Mr. Solisurabji who was a former solicitor, sorry, Attorney General of India during the Vajpayee government, he's an eminent lawyer, he's a senior advocate, his view and all that is given in the article and if you go through it, you will understand why they have been lobbying and against the INSA which is one lobby group, you have another lobby group which is CLSA, the Coastal Lines Shipping Association that represent some of these foreign shipping lines and after the notification was issued, there we issued a statement which is also been put out in the article which says that this is going to be very very bad for the country's economy. In a sense they have also argued that this is going to ruin not just the Indian ship owners and it also may have an impact on employment and this goes completely contrary to the spirit of what Mr. Narendra Modi has been saying make in India. You're actually going to deprive Indian companies of good business. So in the article you mentioned a subsection called level playing field on neocolonialism. Can you throw some light on that section because according to the article it will be difficult for the Indian companies to match the tariff rates, right? You see what I've said that this has got nothing to do with the license control, Raj. Everywhere in the world whether it be China or in the United States of America or Bangladesh they give a certain amount of quote unquote protection to their domestic shipping lines and this is supposed to be not just good for the economy, it's good for the national security of the country. Why? Let me explain. I've just pointed out that Indian ship owners are inefficient, they have to pay more, their costs are higher, their fuel costs are higher, they have to pay higher taxes, their cost of credit is higher, all that is accepted. So they can't really compete effectively with the international shipping lines but this has been a situation that has been created over a period of time. In fact if you look at just not all kinds of shipping but if you just look at what we say containerized shipping and if you just look at because the present relaxation of the rules is largely to do with containerized shipping, I'll just give you one set of statistics. It shows that how in the 1990s the proportion of Indian trade, containerized trade that was carried by Indian ships and flagships was around 42%. This has now come down, the proportion of trade carried by Indian ships has come down to less than 8%. So they are already in such a weak position and after this it's going to be weaker. And I must tell you another thing, as far as Mr Modi is concerned, he has been consistent. I mean right through even from the time he was Chief Minister of Gujarat and under his tenure when the Gujarat Maritime Board had been set up which is the regulator at the state government level, at the state level, he had demanded the relaxation of Kabbata Jews. Can you also throw some light on what's going to happen to JNPT because it's India's largest government owned port, right? That's right. See what is happening is on the west coast the biggest ports are JNPT and Mundra. Now you're going to by having this, a large ship will like to berth at one port. It won't go to both ports and once a large ship berths at a port then its cargo is offloaded and smaller what are called feeders will transport by ship or by other means of transport the goods to other parts of the country in that region. Similarly when you are sort of say this is for say import, imported goods that you are importing but suppose it's exports similarly you know you gather the goods from various parts of that region you aggregate it then you put it on smaller ships and you finally go to and load it on to a big ship. There will be no incentive for a foreign ship owner to come to JNPT or the Jawaharlal port trust. So in a sense it's a kind of cannibalization and JNPT is likely to lose at the expense of Mundra. Now you can say JNPT is inefficient, JNPT is not doing well, it deserves to do badly and this is the rules of the market, free market competition but then it's also going against Mr Modi's own claims that he wants to support Indian industry and his whole slogan of make in India because what is now likely to happen with the new rules is even the foreign shipping companies would engage in what is called predatory pricing. They undercut the Indian ship owners, they have deep pockets and they want to drive out the Indian companies from business and therefore they will start dominating the market. This is the apprehension. So you've also sent a questionnaire to Mr Adhani and asking about the revenue projections. Have the replied back and if no then what are your estimates that how much profit are the Adhani groups going to make? This is a difficult question to answer. I can't answer. All I can say is that you know me and my colleague Abhijeet Das Gupta, we had been working on this article for some time now because I'm working on a book on the Adhani group and you know first we sent him and his team a questionnaire on the 20th of April and then after this notification came on the 21st of May two days later on the 23rd of May we sent him another questionnaire seeking a whole lot of I mean seeking answers and reactions to a whole lot of questions because these one of the major companies in his group which is APSEZ Adhani ports and special economic zone is likely to be a big beneficiary. And this company and other companies in the Adhani group have tie up with some of the biggest shipping companies in the world like Mediterranean shipping company like ACM, ACGM, DP world and they are like the biggest players in the world. So I've been trying to ask them did they seek their support? How are the lobbying going on? Because you know this lobbying has been going on for four years but it's finally happening one year before the elections. The question you asked revenue projections I don't know but there is every indication that the group may benefit considerably. In the last story that you wrote for NewsClick which talked about Mr Ambani and the tax havens you said in an interview that it's just a tip of the iceberg. Is there something like this when it comes to the story? I don't know. You know after one writes this story all kinds of people start approaching you. So after this article was published by NewsClick which was just very recently on Friday I have lots of people are saying yes there is more to the story and one angle which people are talking about which they say needs to be emphasised. Everybody saying you've written too long a story who's going to read 6,500 words? I said no just read the summary is right up front but they're saying there is a lot on the national security angle which can be elaborated on and remember at one point of time their current position is not known but the National Security Council and the Prime Minister's office had expressed apprehension about the relaxation of these rules. So I think yes there may be more to the story. Hopefully Puranjeevan these things will come out more and hopefully will again sit here and discuss that national security angle with you once again. Thanks a lot for giving us time. Thank you for speaking with me. Thank you for watching NewsClick.