Private players are fully geared to participate in the new port projects being announced by the ports

- R Ravi Kumar

Secretary General, Indian Private Ports & Terminals Association

Government has undertaken many infrastructure development plans viz. GatiShakti, Bharatmala, Sagarmala, Jal Jeevan Mission etc. What is your view on this?

It is an excellent initiative by the government to focus on expeditious infrastructure development in the country through the schemes of Sagarmala, Bharatmala, Gati Shakti, National Monetisation Pipeline etc. The concept of port led development, as envisaged in the Sagarmala Project, will go a long way in developing port related infrastructure in the country. However, sufficient planning needs to be done backed up by proper allocation of resources to make it  a success.

How is Indian ports and logistics sector evolving in the past few years?

As far as Indian port sector is concerned, it is evolving from a Service Port model to a Landlord Port Model. Presently, a hybrid model is being followed combining service model and landlord model where the port continues to render services but also act as a port operator. The shift from this hybrid model to a completely Landlord Model has started with the successful privatisation of JNP container terminal. As far as tariffs are concerned, there has been a shift from a regulated tariff to market-based freedom to fix tariffs.

According to you, how are the ongoing developments helping the ports sector in operational efficiency enhancements?

The key to operational efficiency enhancements is induction of sustainable modern technology and the ports are geared towards embracing such technology. Government has successfully implemented Port Community System in the port sector and is moving ahead to introduce National Logistics Portal - Marine which will cover end-to-end users. Many ports have the latest Terminal Operating Systems, Track & Trace tools and are adopting to Block Chain Technology, Big Data Analytics, Automation and Artificial Intelligence etc. Modern technology will go a long way in contributing to reduction in logistics costs.

How are private port operators and terminals supporting India's port expansion plans?

Private players are fully geared to participate in the new port projects being announced by the ports. However, in order to attract private sector participation in a big way, it is essential that proper regulatory environment is created to facilitate this.

What further government policy supports is needed for better operational efficiency at ports?

Some terminals are constrained by lack of space leading to congestion. Ports should be encouraged to allocate more space for storage and operational purposes wherever feasible at nominal prices which will go a long way in increasing operational efficiency. Ports should also undertake last mile road/rail linkages expeditiously to ensure speedy evacuation of cargo.

Curtailment of existing tax benefits, EPCG benefits, SEIS benefits etc. for the port sector, would dampen the interest of these players to come forward in a big way. The port infrastructure sector is highly capital intensive and has long gestation periods with high risks involved. Unless there is a conducive environment, the private sector is not going to be enthused to invest heavily, defeating the very objective of enhancing PPP participation in port projects. Seaports are recognised for their importance in facilitating trade growth and associated economic development. These attributes give rise to the concept that seaports are in the nature of public goods. Therefore, there is an urgent policy reform required in terms of major ports operating as service organisations rather than on commercial principles. For example, while the land is given on nominal basis for new concessions, in respect of all other land allotments related to port-led development, the lease rentals are charged on a commercial basis.

Major ports are under the administrative control of Central Government while non-major ports are under the control of the respective state governments. It is necessary that there should be some integrated planning to avoid creation of duplicate facilities and unhealthy competition between major ports and non-major ports competing for the same cargo from the common hinterland leading to underutilization of both the facilities. Suitable regulatory measures for preventing unhealthy competition between major ports and non-major ports will be required.

Some PPP projects in the port sector were adversely affected by regulatory framework inadequacies and the new Model Concession Agreement, 2021 has not helped them as government has applied these provisions only to new concessions. There is a need to address this and allow migration of existing concessionaires to new MCA and the regime of complete market freedom in fixation of tariffs. Creation of competition within the port with old terminals operating under a restricted regime as compared to new terminals does not help in creating a level playing field. At the same time, certain deficiencies in the new MCA which come in the way of raising finances should be addressed.

Proposals under the National Monetisation Pipeline aiming to unlock about Rs 14,000 crores worth of port assets are always welcome as it will enable ready assets to be privatised reducing the risk for the private operator. However, these projects should not come with a heavy price tag which can render them unviable and unattractive. Apart from infrastructure assets, the proposals should also include privatisation of services like pilotage & towage, warehouses, dry docks etc.

What opportunities do you look for private ports in future?

We congratulate the Ministry of Ports, Shipping and Waterways for initiating a number of steps for promotion of infrastructure in maritime sector in the country. The Maritime India Vision-2030 (MIV 2030) aims at implementing the Landlord Port model in major ports whereby the Port Authorities will be carrying out the regulatory functions, while most of the operating facilities will be handed over to private players. MIV 2030 envisions an overall investment of Rs 300,000 to Rs 350,000 crores across ports, shipping, and inland waterways. India's port sector needs to double its capacity by the year 2030.

As a part of MIV 2030, major ports need to undertake 423 MTPA of capacity addition. A total investment cost of over Rs 33,400 crore has been envisaged for this capacity expansion. Out of this, approximately 95% capacity expansion is likely to be planned under PPP/Captive mode by major ports. There is a huge opportunity to private sector to participate port infrastructure development in a big way.

What is your outlook on Indian ports sector? What could be the trend in the private ports segment in future?

We are very optimistic in our outlook that Indian ports sector is going to witness a robust growth, not only in terms of infrastructure development, but also in terms of the Ease of Doing Business.

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