India needs a vibrant national port policy

Jose Paul | Updated on March 12, 2018

Action stations: It’s time to corporatise. SHASHI ASHIWAL

The trust system needs to go. All ports should function as corporate entities

India’s major ports urgently need thorough organisational restructuring with a view to transforming them into viable business entities.

India’s 7,500-km coastline is served by a dozen major ports, about 200 notified non-major ports in nine maritime States and Union Territories out of which only 61 non-major ports including those in the Andaman and Nicobar Islands are reported to have handled cargo traffic.

While the major ports fall under the administrative control of the Ministry of Shipping, the non-major ports come under the administrative jurisdiction of the respective State maritime boards or governments.

Of the major ports, only Ennore has been constituted under the Companies Act, while the rest are administered and governed by the provisions of the Major Port Trusts Act 1963. The administration of non-major ports differs from State to State.

In maritime States such as Gujarat, Maharashtra and Tamil Nadu, the port assets are transferred to the respective Maritime Boards. Individual port facilities are either controlled by the board or leased out to port operating companies for terms ranging from 20 to 99 years.

Hardly any development

The major ports have functioned under the trust system for periods varying from 25 to 144 years. They have not been able to function as vibrant commercial enterprises.

The boards of port trusts do not seem to have succeeded in taking timely decisions and making investments in infrastructure due to administrative and bureaucratic delays. Therefore, the ports have failed to develop into major infrastructure entities to promote international trade.

To cite an example, the private operator Adani Ports at Mundra in Gujarat crossed the cargo mark of 100 million tonnes in 2013-2014 within a span of 20 years, whereas Kolkata, Mumbai and Chennai which were declared major ports in 1870, 1873 and 1881 respectively, could handle only 41, 59 and 51 million tonnes respectively in the same year. Kandla, declared a major port in 1954, could handle only 87 million tonnes in 2013-2014.

Ennore, which was declared a major port in 1992, handled 27 million tonnes in 2013-2014.

The performance of this port suggests that major ports will be able to perform better if they are corporatised.

Provisions in the new Companies Act 2013 will enable Indian major ports to evolve into good organisational outfits and make them commercially productive and operationally efficient. They should also be given greater financial autonomy.

Parliamentary approval will be needed to repeal the Major Port Trusts Act 1963 to convert the major ports into public limited companies. This will help them access private capital, give them flexibility in managing affairs, take them out of the control of the tariff authority for major port trusts and allow them to compete effectively.

Government must facilitate

All the major ports should be governed under the new Companies Act 2013; there should be no distinction between major and non-major ports.

All port companies should reflect a national character and they should function either as public limited companies or as private limited companies.

In developed nations, ports are primarily either a State or a municipal matter and the Centre’s role is to facilitate.

In the US, the federal government is involved in capital and maintenance dredging of approach channels on a cost-sharing basis with the concerned ports. Canada has a nationwide port system by which Transport Canada exercises general control. Ports in Australia are a state matter but the government does not get involved in waterways maintenance, though it provides some capital assistance. In Japan, there is greater involvement of local municipalities and corporations. Ports in France are controlled by the French administration.

Seaports in Germany come under the respective city states; the national government does not identify itself as a partner. However, it undertakes the responsibility for dredging and maintenance of approach channels.

Ports in the Netherlands generally fall under municipal control. The government participates in channel deepening and contributes to the cost of breakwaters, sealocks and reclamation.

The UK government does not get involved financially in any port development project; it encourages the private sector to get involved in port development.

India can draw from these examples.

The writer was formerly the acting chairman of JN Port and chairman of the Mormugao Port Trust

Published on February 08, 2015

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