Maritime Finance Corp to raise Rs 5,000-cr thru tax-free bonds

N. K. Kurup Mumbai | Updated on March 02, 2011 Published on March 01, 2011

Mr Rakesh Srivastava

Port developers can hope to get long-term low-cost funds from the proposed Indian Maritime Finance Corporation.

This proposed financial institution is expected to get the rights to raise funds through the Rs 5,000-crore tax-free bonds announced in the Union Budget for the port sector by the Finance Minister on Monday, according to a senior Government official.

The Union Shipping Ministry had announced creation of a dedicated financial institution for the maritime sector in its vision document for the next decade, released recently.

Mr Rakesh Srivastava, Joint Secretary, Ports, Ministry of Shipping, told Business Line, that the proposed Maritime Finance Corporation will be formed soon so that it can plan the resource mobilisation including the issue of tax-free bonds in the coming fiscal.

The Ministry will first initiate the process to set up the institution, he said.

The Budget had allowed the issuing of Rs 30,000 crore tax-free bonds for the infrastructure sector, of which Rs 5,000 crore will be for the port sector.

Other sectors such as Railways and roads already have institutions like Indian Railway Finance Corporation and the National Highways Authority, which can raise the funds through issue these bonds.

Currently there is no dedicated financial institution for financing projects in shipping, port or any other related areas. Banks are generally not keen on funding projects in these sectors which have a long gestation period.

Ports and shipping sector needs huge investments to develop the cargo handling capacity required to meet the growing demand of both domestic and international trade.

Private ports boost

Mr Rahul Asthana, Chairman Indian Ports Association, said the Budget proposal will greatly benefit the private sector ports. Most of the new projects are in the private sector or are being developed through the PPP route. Such projects will have access to funds from the proposed maritime finance corporation.

According to the maritime agenda of the Shipping Ministry, the port sector needs an investment of Rs 3 lakh crore to increase the port capacity to 3.2 billion tonnes from the current capacity of below one billion tonnes.

Several new projects are coming up in the port sector. A new multi cargo private port – Dighi port in Maharashtra – will start operations soon.

Recently, a major container terminal was commissioned at Vallarpadam off Kochi port in Kerala.

The Kerala Government is also promoting another port project in Vizhinjam near Thiruvananthapuram.

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Published on March 01, 2011
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