Coastal shipping policy to be firmed up soon

With a coastline of 7,517 km, the maritime sector is important for India, for both commercial and strategic reasons.

About 90 per cent of volume and 70 per cent of the value of the country's international trade moves through maritime transport. In this context, the Shipping Ministry is looking at various ways of streamlining operations in this dynamic sector — from creating a common regulatory regime for private investors in ports, to tracking the charges levied by shipping lines, and from improving coastal trade to manpower supply for the sector. Mr K. Mohandas , Secretary, Ministry of Shipping, spoke to Business Line, on these and other issues.

Excerpts from the interview:

Has the methodology to issue Rs 5,000 crore of tax-free bonds as announced in the Budget been finalised? Who will issue, and who can use, them?

Not yet. We will be discussing it soon to work out the strategy. We have two options. One is to set up a new organisation that will issue the bonds, as we have no apex maritime financing body.

The other option is to ask one of the existing financial institutions to raise the funds for ports infrastructure. On setting up a separate agency (that was proposed in the maritime agenda), we have to decide whether to do it now, or later, or don't do it at all.

The Ministry has proposed to bring in a new regulator for ports. What will happen to the existing concessions, and terminal operators, for which TAMP (Tariff Authority of Major Ports) is already the regulator?

The draft for new regulator is already out. We have proposed a dual structure regulatory mechanism — Central and State. Regulators will not fix tariffs. For the major ports, there will be some guidelines for tariff fixation. Once this is enacted, the detailed rules can be finalised.

As for existing concessions, guidelines to set tariffs were finalised in 2005. They were valid till March 31, 2010. We extended the validity by a year. It lapsed on March 31.

They are due for revision or extension. We had set up a group committee with officials from the Ministry and industry to suggest a new mechanism.

The committee, which was supposed to have given in its report by now, has not yet done so. Temporarily, we will extend the earlier guidelines. Once we get the report, we can decide.

Could you share with us some issues which are being reviewed?

I would like to wait for the report of the committee…One of the issues to be tackled is a view that efficiency is penalised in the current system. But, even while we tackle that, we have to ensure that terminal operators do not make windfall profits. So, we have to strike a balance.

What is the status of the Shipping Trade Practices Bill?

The draft is ready. We are making some last minute additions, which relate to voluntary discussions and agreements among the liners. We want to incorporate provisions governing the liners co-operatives.

That has also been drafted. Now, we have to get requisite approvals. The aim is to ensure competition in the container liner shipping services area so that the users do not suffer, but permit cooperation subject to regulatory control.

Are they on the lines of the strict EU anti-trust rules….?

Different regions have different rules. The EU is quite strict, the US has a different policy. What we are looking at is whether they (the voluntary agreements) add to efficiency and reduce costs. We are taking into account the fact that the industry is going through difficult time.

Has there been any movement on the Ministry's proposal for the new shipbuilding subsidy scheme?

Not at the moment.

The Ministry was concerned about the issue of making more training berths for seafarers?

Getting a training berth is a very important issue. Indian seafarers are seven per cent of the total seafarer population. That means we are not fully utilising our demographic dividend.

We need more training berths. Of course, there are not many Indian shipping lines. But still, the focus has to be increased.

Has there been any movement on the getting Government to fund the capital and maintenance dredging?

As of now, the current practice continues. Several capital dredging projects have been supported by Government — fully and partially. But this is an ad-hoc policy.

We will try to redouble our effort in the Twelfth Plan. Ship sizes are increasing, we need deeper draft and a policy is needed on the issue. Maintenance dredging is funded by all ports themselves, except in Kolkata, where Government funds it.

The Ministry had proposed setting up of an investment agency called Indian Ports Global, on the lines of Temasek Holdings' PSA in Singapore. Has there been any action on that issue?

Not yet. But it is an important proposal. Ultimately, the Ministry, Government will have to take a leadership. We do consider it very important commercially, and strategically as well.

In the context of promoting coastal shipping, what is the status of the proposal on relaxation of Cabotage Law to allow foreign shipping lines?

The proposal is very much live with us. We will be taking a view on it. We have had inter-ministerial discussions already. We will bring out the overdue coastal shipping policy very soon.

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