Shipping Ministry questions relevance of tariff body

The Ministry of Shipping has asked the Indian Ports Association to review the role of the Tariff Authority for Major Ports (TAMP) and its relevance, given the changing dynamics of the port sector. The rationale for such a review may be the increasing share of non-major ports (now 45 per cent) that do not come under TAMP’s purview.

The trade has been urging the government to review the regulatory regime for ports, especially tariff regulation, which covers only 5-10 per cent of the cost of the logistics chain.

TAMP guidelines impact inter-terminal competition at major ports and they offer only limited incentive to improve efficiency, the IPA said in a note circulated to trade members seeking their comments on TAMP’s relevance.

There is a need to review the current regulatory framework in terms of tariff regulation, competition regulation, service standard, performance assurance, dispute resolution, grievance redress and policy advocacy, the note said.

The IPA, a think-thank for major ports, appointed research firm Deloitte Touche Tohmatsu India to review TAMP and its role. Based on its recommendations, the IPA outlined various options for tariff regulation. At present, major ports governed by the Centre are regulated on two aspects — tariff regulation for major ports by TAMP and competition regulation by the Shipping Ministry and Competition Commission of India.

TAMP, created in April 1997, has jurisdiction over the 13 major ports and private terminals developed at major ports. It fixes rate scales for services rendered by the ports, rentals for use of port trust properties and charges for services rendered by port operators (concessionaires).

The last two decades have seen a significant shift in port dynamics, largely owing to globalisation of manufacturing, increased containerisation, changing distribution patterns and growing use of regional transhipment hubs.

The natural evolution of the port sector, in terms of lifecycle and economic growth, has led to changes too. For instance, there has been an increase in the number of non-major ports under the jurisdiction of State governments.

There is also a trend towards the landlord port model and the government is placing increased emphasis on public-private-partnership projects. The government also plans to corporatise major ports to bring in market-oriented business practices and attract private investments.

Due to these changes and the degree of achievement by TAMP of its objectives, its relevance in the present context is being debated, the IPA note said.

J Krishnan, Chairman, Logistics Committee, Madras Chamber of Commerce and Industry, and a trustee of the Chennai Port Trust, said that while tariffs may be market-driven, performance standards must be first set, audited independently and service failures be matched by monetary relief to the users.

Krishnan said the Indian port sector is yet to mature for total deregulation of tariffs, which can be market driven.