Proper regulatory environment is essential to attract private participation in Sagarmala programme.

- R. Ravi Kumar

Secretary General, IPPTA

How do you see the port-led development giving a boost to cargo movement and India becoming a transhipment cargo hub?

The concept of port led development, as envisaged in the Sagarmala Project, is an excellent initiative taken by the government. However, this needs to be backed up by proper planning and allocation of resources to make it a success.

As regards developing of transhipment hubs in India, presently, about 75% of India's transhipped containers are handled outside India at hubs such as Colombo, Singapore, Port Klang.  This creates long term risks for India's competitiveness. In order to develop Transhipment hubs in India, it would need huge investments in building proper port infrastructure including sufficient berth capacities, provision of deep drafts , productivity enhancements etc. There is a strong case for developing one or two major ports in South India as transhipment hubs.

As an association, what according to you are the challenges and opportunities that come along with the port-led development for the port developers and operators? How do you see the National Monetisation Pipeline giving a further boost to the Sagarmala project?

We congratulate the Ministry of Ports, Shipping and Inland Waterways for initiating 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 handled over to private players. MIV 2030 envisions an overall investment of Rs 3,00,000 to 350,000 crore 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 capacity addition. A total investment cost over Rs 33400 cr 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.

In order to attract private sector participation in a big way, it is essential that proper regulatory environment is created to facilitate this. Removal of existing tax 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 recognized 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.

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 which have also affected fresh bidding in new PPP projects. It is essential to recognise that challenges exist in improving regulatory frameworks, dealing with bottlenecks and creating an investment friendly climate for ensuring the long-term sustainability of PPPs.

Proposals under the National Monetisation Pipeline aiming to unlock about Rs 14000 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, drydocks etc.

What is the kind of investments that are expected to come in the sector as well as the allied industries?

Difficult to say. It depends on a number of factors like the regulatory regime, viability of the projects, availability of liberalised funding etc.

Your views on the rethink over the cabotage policy and its impact.

Relaxation of cabotage laws will encourage transhipment of containers through Indian hubs thus reducing the overall coast to the exporters and the economy. However, such policies should be implemented on a long term basis so that foreign shipping lines are encouraged to enter the Indian coastal sector.

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