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Adani Group can lead India’s alternative to China’s Belt and Road

Gautam Adani, chairman of Adani Group, in Kolkata on April 20: His close ties to the Modi administration have given retail stock buyers the impression New Delhi will support the group overseas.

Posted on August 17, 2022

Akhil Ramesh is a research fellow at Pacific Forum, a foreign policy research institute based in Honolulu, Hawaii.

Recent events are forcing the West to recognize the urgency of infrastructure needs in the Indo-Pacific.

Over the past few months, Sri Lanka, Pakistan and Bangladesh have each sought aid from the International Monetary Fund as they have run low on foreign exchange to keep up on loans from China for infrastructure projects and other international debts. The Solomon Islands and other Pacific states, meanwhile, have stirred concern by opening discussions with China for projects of their own.

Such developments have prompted the U.S. and other Western nations to launch a series of alternative programs to Beijing’s Belt and Road Initiative, including most recently the Group of Seven’s Partnership for Global Infrastructure and Investment.

These efforts, however, are fragmented and smaller in scale than China’s BRI, suggesting their impact could be limited. It may be more fruitful to instead look toward China’s neighbor India, one of the first countries to warn about BRI debt risks.

Here, the privately run Adani Group may be able to give Chinese state-owned infrastructure developers a run for their money.

The race has already started. Billionaire Chairman Gautam Adani last month told shareholders of one group company, “Several foreign governments are now approaching us to work in their geographies and help build their infrastructure.”

The airports-to-cooking oil group has grown exponentially over the last decade to become India’s second-largest conglomerate by aggregate market capitalization, behind only Reliance Industries.

Adani Group’s operations cover ports, airports, power generation and transmission, gas distribution and more. Forbes and Bloomberg each now rank Adani as the world’s fourth-richest person due to the growth in value of his companies.

In July, his Adani Ports unit won a tender to take over Israel’s Haifa Port with a 4.1 billion shekel ($1.26 billion) bid. This will put the company into direct competition with China’s state-owned Shanghai International Port Group, which runs a neighboring facility that has raised U.S. concerns.

India has good relationships with many of the nations that China has targeted with the BRI in the Middle East, South Asia and Southeast Asia and can leverage these ties to offer an alternative route to build ports, power stations, airports and other infrastructure projects via the Adani Group.

Other Indian companies have previously run into difficulties in challenging the Chinese. A decade ago, a new government in the Maldives abruptly terminated GMR Infrastructure’s $500 million contract to modernize Male International Airport, signing a new deal instead with a state-owned construction company from Beijing. GMR eventually won a $271 million legal settlement from the Maldives.

Incidents like this have caused many private Western infrastructure companies to hesitate about plunging into the markets China has targeted with the BRI, while some who entered the region before Beijing launched its strategy have seen their positions crumble.

Cambodia, for example, has unilaterally undermined the monopoly concession it previously granted France’s Vinci Group to run the country’s international airports by granting new Chinese-backed groups rights to develop competing airfields. The first of the new airports, being built near the Angkor Wat historic site, is to open next year.

Political uncertainty and the chance of getting caught in a power struggle between international powers do not make for an ideal situation for a corporation that has to answer to public shareholders.

While many companies under the Adani Group also have public shareholders, the chairman’s dominant position and his close ties to the Modi administration have at least given retail stock buyers in India the impression New Delhi will support the company overseas.

Sri Lanka’s state electricity board in June acknowledged that the Indian government had recommended awarding two wind power projects to Adani Green. The board’s former chairman set off a storm of controversy with testimony that Gotabaya Rajapaksa, then Sri Lanka’s president, had told him he was under pressure from New Delhi to award the deals to Adani Group as Colombo sought financial support from India.

For similar reasons, Chinese state-owned contractors often have an edge in seeking infrastructure deals overseas due to the involvement of Chinese state-owned banks and financial institutions in providing financing.

In the past, India has used its state-owned banks to support government-backed projects in high-risk areas, including Oil and Natural Gas Corp,’s oil exploration activity off Vietnam’s coast in the South China Sea and India Ports Global’s takeover of the port of Chabahar, Iran. The State Bank of India and Export-Import Bank of India could support new Adani projects as well.

Alternately, the other members of the Quadrilateral Security Dialogue — the U.S., Japan and Australia — could help with financial backing, much in the way they have cooperated with the bloc’s initiative to provide 1.2 billion COVID-19 vaccine doses to Indo-Pacific nations.

In this division of labor to respond to the BRI, India is best positioned to deploy masses of young engineers for large-scale infrastructure projects. With the standards required to secure Western financing, Adani Group would then have no other option than to be transparent in its dealings.

Indeed, in the geoeconomic competition between India and China, the democratically elected government’s championing and advocating for the Adani Group may just be the solution to taking on China’s global initiative.


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