New Delhi Lends Burma Money for Joint Venture

The central Indian government's construction agency RITES —Rail India Technical and Engineering Services—had a deal to spend about US$100 million redeveloping Sittwe and improving transport to the port, including making the Kaladan River navigable for deeper draft commercial vessels. It involves Burma contributing $10 million towards the mutually beneficial project.

However, Burma has reneged on its part in the deal. But the project is an important plank of India's Look East policy, so New Delhi has given Burma the $10 million, in what it calls a "soft loan," to move the project can go ahead.

India's Minister of State for Commerce Jairam Ramesh was quoted by The Times of India newspaper saying the project was essential to the northeast states, notably Mizoram, which needs access to the sea for trade.

"When the project is completed, Mizoram will become a hub of international trade," Ramesh said.

Mizoram is one of seven northeastern Indian states with a combined population of 36 million people, largely isolated from the rest of India.

"The Burmese authorities may have gone cool on the plan because they are not that keen any more on India buying most of the gas in those Shwe fields offshore from Sittwe," said analyst Collin Reynolds in Bangkok. "On the other hand, that port needs developing to handle the gas and two Indian state companies have production interests in those gas fields. Or maybe the junta just hasn't got the cash."