A safe harbour for ports

The Centre's inclination towards a legislation for bringing all ports in India under a common regulatory regime is clearly an attempt at levelling the field between two sets of players in this business. Currently, the 13 so-called major ports managed by the Centre are governed by the Major Port Trusts Act, 1963, while there are 187 ‘minor' ports (including privately-promoted ones) under the jurisdiction of respective State Governments. The latter, contrary to their nomenclature, aren't necessarily minor: The Adani Group's Mundra Port in 2010-11 handled almost 52 million tonnes (mt) cargo, making it the country's seventh largest and quite comparable to the bigger major ports such as Kandla (82 mt) and Vizag (68 mt). Moreover, the minor ports put together had a 35 per cent market share, with their cargo volumes more than doubling from 155 mt to 314 mt since 2005-06. This was against a much lower increase (424 mt to 570 mt) recorded by major ports. The distinction between ‘major' and ‘minor' ports has, thus, lost its relevance.

Related to this is another anomaly. There is a Tariff Authority for Major Ports (TAMP) currently that fixes and monitors tariffs – but only of major ports and the container/bulk cargo terminals set up by private developers in these ports through public-private-partnerships. The TAMP, however, does not regulate the tariffs charged by minor ports. In effect, it has created a dichotomous regulatory regime. On the one side, there are the major ports and the private terminals operators in them, both governed by the TAMP's tariff orders. At the other end are the private and other non-major ports under State Government laws, pretty much free to set their own tariffs. There is certainly a strong case to remove this lacuna and have a single consolidated law that would be applicable to all ports, major or minor. States are likely to oppose the move on grounds that it would undermine their authority over minor ports. In an atmosphere of heightened political sensitivities about regional autonomy, creating common ground for reform is a challenging task. The Centre's decision to constitute an Inter-Ministerial Committee, which will also have representatives from the States, to work out an acceptable regulatory framework is a recognition of this reality.

Simultaneously, there is a need to dispense with the TAMP altogether. What is the point in having a body that fixes tariffs for only one set of ports? One may go even further and ask: Why fix tariffs at all? The necessity to regulate prices of services in order to protect user interests arises only in an imperfect market. That objective may have been better served in this case through the mushrooming of minor ports and the stiff competition they have given to their entrenched ‘major' counterparts. That's precisely what a Mundra Port, for instance, has done to Kandla or, for that matter, Gangavaram to Vizag and Dhamra to Paradeep and Haldia. We need many more of them.