Dubai ports group sails into political storm in India

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Dubai Ports World, which caused a political storm in the US when it acquired P&O's ports in that country, has now sailed into controversy in India.

DP World, which has already been forced to put the US assets that came with its £4bn purchase of P&O up for sale, has run into political flak in India. The P&O deal would give DP World, which already has operations in India, some 50 per cent of India's container shipping traffic. Local critics of the transaction have suggested that this would amount to a monopoly and have called on central and regional governments to block the transaction.

Although the US divestment has been painful, having to give up some or all of P&O's Indian assets would be much more economically damaging for DP World. For the Dubai company, which is owned by the royal family of the United Arab Emirates, the attractiveness of P&O centred around its fast-growing port operations in Asia.

The P&O acquisition technically completed earlier this month. The six US ports are now owned by DP World but they are being run by an independent entity until a buyer can be found.

DP World already runs two container terminals in India - at Kochi and Visakhapatnam - while P&O has three: Nhava Sheva (at Mumbai), Chennai and Mundra. P&O also has two other major ports in the region: Qasim in Pakistan and Colombo in Sri Lanka.

Last week, the Water Transport Workers Federation of India called on the central government to use the Monopolies and Restrictive Trade Practices Act to stop the deal.

The union said: "The move by DP World to acquire P&O's container terminals in India forebodes the emergence of monopoly in container port service."

Separately, the Gujarat Maritime Board, which is the regulator at Mundra International Container Terminal, has given the P&O ports operation in India until the end of March to explain why it has not been informed of the takeover. The Board has suggested that the P&O licence could be "cancelled". Prior consent of the authorities is required before Mundra can pass into new hands.

The P&O acquisition made DP World the No 3 global ports operator, with 51 terminals in 30 countries. The deal has been seen as a strong sign of Dubai's global economic ambitions.