A port becomes a wheel of economy if it runs efficiently. Presently the function of a port is not only limited but has expanded to a logistical platform. The efficiency of a port is important in international trade since a seaport is the nerve of foreign trade of a country.
Ports constitute the inter-model interface between maritime and land (road and rail combined) transport. India has a coastline of around 7,517 km with 12 major ports and 187 notified non-major minor/intermediate) ports along it coastline and Sea Islands.
Almost 95 per cent by volume and 70 per cent by value of India’s global merchandise trade is carried through the sea route. In 2016-17, the 12 major ports handled about 80 per cent of the maritime cargo of the country. The balance 20 per cent was handled by the non-major ports. Overseas cargo accounts for about 77 per cent of the total cargo handled at Indian ports.
Recent Policy Initiatives in Port Development
The Ministry of Shipping, the nodal agency for ports, encompasses the shipping and port sectors, including shipbuilding and ship repair, major ports and inland water transport. As per government policy, 100 per cent FDI is allowed in port development projects.
As way of incentive, 100 per cent income tax exemption from income tax is extended to companies investing in port infrastructure. Further, a 10-year tax holiday has been given to enterprises engaged in the business of developing, maintaining and operating ports, inland waterways and inland ports.
A major promotional initiative of the ministry is the National Maritime Development Programme (NMDP), an initiative to develop the maritime sector, with an outlay of USD 11.8 billion. The policy lists measures for enhancing private investment, improving service quality and promoting competitiveness to meet medium- and long-term objectives.
With this objective, the Department of Shipping has finalised the list of projects to be taken up in major ports under the NMDP up to 2011-12. These projects will involve a total investment of Rs 55,804 crore. The programme will be implemented through public/private partnership in two phases.
Besides the NMDP, the government has initiated two more notable regulatory and policy initiatives to ensure the holistic development of the Indian port sector — the National Maritime Agenda 2010-20 and the Draft Port Regulatory Authority Bill, 2011.
The National Maritime Agenda 2010-20 outlines the framework for the development of the port sector with a target capacity of over 3 billion tonnes by 2020, largely through private sector participation. The agenda envisages a cumulative investment of around Rs.2,774 billion in the port sector between 2010 and 2020 in three phases. The non-major ports are expected to account for 61 per cent of the proposed investment and the major ports for the rest.
The agenda also suggests policy-related initiatives to improve the operating efficiency and competitiveness of Indian ports. These include major ports to be turned into landlord ports by 2020 with their role being to provide the port infrastructure, while operations and services would be provided by the private sector participants.
The Draft Port Regulatory Authority Bill, 2011, provides for the establishment of a regulatory authority to regulate rates for facilities and services provided at the ports and to monitor the performance standards of port facilities and services. The regulatory authority will be tasked with the job of framing guidelines for port authorities and private operators on rates that will be charged for various services.
Further, the authority will also lay down performance norms and quality standards to be met by port authorities and private operators, besides monitoring their performance. Port authorities and private operators running facilities with a cargo- handling capacity of less than 5 million tonnes a year will be outside the purview of the authority.