Transforming Indian Ports into World Class Facilities

Sep 05, 2011, 3:44PM EST
Roadmap for revamping ports in India for meeting challenges from overseas

 Various factors including corporatization of ports to allow greater leeway in operation, taking on board other business models better than the present Public Private Partnership (PPP), enhanced port connectivity, greater focus on port operations and infrastructure developments were considered crucial for transforming Indian ports into world class facilities. These factors took center stage in the free and frank interaction that took place at the National Conference on Ports and Shipping 2011 held at Hotel International - The Lalit, in Mumbai last week.

A lot of stress was laid on the need for favorable regulations to encourage greater participation by private stakeholders as it would go a long way in promoting rapid infrastructure development.  In particular, participants wanted draft enhancement in all ports to at least 14 meters and reduction in the average turnaround time in order to be in par with prevailing globally competing ports such as Singapore, Hong Kong, etc.

Ramu S. Deora, Chairman of the All India Shippers’ Council in his presentation stressed on the need for better port connectivity. “With the prevailing road conditions it takes a full day to move a truck load from my factory to JNPT which is just 47 kms away,” he said.

Hemant Bhattbhatt, Sr.Director of Deloitte Touche Tohmatsu India Pvt Ltd pointed out that 352 projects that have been set out for developments of ports required an investment of $ 26.5 billion out which $ 16.2 billion would have to come from the private sector.

From the public sector side L. Radhakrishnan, Chairman of Jawaharlal Nehru Port Trust called for greater flexibility in the model concessional agreement and expressed the need to revisit such agreements every 10 years. The government should not be restrictive as was the case in the present PPP model where it was more concerned about the financial aspect rather than being focused on bringing in superior technology.”

He stated that JNPT is in the process of undertaking capital dredging work to enhance the draft of the port to 14 meters in the first phase and increase the draft further to 17 meters in the second phase. “When it comes to improving road connectivity JNPT does not have a say as it is a minority partner in the National Highway Authority,” he said. “Also the rail connectivity has lagged behind because port sector is not allowed to participate.”

In the panel discussion on “Policy Reforms for Developing World Class Ports” chaired by Michael Pinto the former Union Secretary it was brought out that there was no mention of Cabotage law in the Major Port Act as such. In fact there is mere indication that foreign flag vessels are required to seek the permission from the Director General of Shipping, government of India if they want to move cargo from one Indian port to another. However, with hub ports coming up in India if foreign lines were denied the permission to take cargo to more than one port there was all the possibility of them unloading in a big way the transshipment containers at foreign ports in the vicinity of India as was already happening. There was an agreement that as such time feeder vessels were available to move containers, the coastal trade could be restricted for Indian flag vessels except in the case of containerized cargo. But what was important was there should be guidelines which would indicate to the Director General of Shipping as to when the Cabotage law could be relaxed.

Advocating the cause of the private players Mr. Radhakrishnan stated, “Captive berths will bring huge relief to private business serving also as an incentive for them to invest.  The dredging policy needed to be rehashed in order to ensure that Indian companies get better options.” He preferred the assured depth model for dredging in ports. However, he was very critical about the present policy of the Tariff Authority for Major Ports (TAMP) the present port regulator which chose to penalize terminal operators for showing outstanding efficiency and productivity. He felt corporatizing major ports would help in enhancing the quality of port operations and ensure their rapid development.

The panel discussion on “Indian Shipping Industry, Progress, issues and the way Forward” as chaired by the Director General of Shipping, Dr. Satish B. Agnihotri touched upon taxation, measures to increase the share of Indian flag vessels, etc.

It commenced with Arun Kumar Gupta, Director (Technical & Offshore Services), Shipping Corporation of India making a power point presentation. He brought out the facts that in India only 6 per cent of the cargo moves by water while the rest by road or railways. A glaring fact that was brought to the notice of the participants was that 70 per cent of the time of a coastal vessel was wasted in the port waiting for a berth. The lack of repair facilities in India for coastal ships further served as a deterrent. 

Coastal shipping needed to be taken seriously and this could happen if this trade was restricted to only Indian flagged vessels. But the crucial issue namely the economics of transport was a matter of concern. A number of players pointed out that coastal shipping turned out to be expensive when one considered the cost from the point of origin to the point of final destination compared to road or railway transport. Thus there was little likelihood of being able to popularizing it. The factors that caused cost to rise making it unviable were customs, the last leg of the transport which was overland, multiple handling, etc.  

The Chairman Dr. Agnihotri pointed out that there cannot be a standalone approach to coastal shipping as there were other factors to be considered. It is necessary to consider the road to port and port to road movement and work out the cost for each leg of the entire transport chain and then only considered how feasible coastal shipping can be. In other words the question of promoting coastal shipping can be considered in those sectors where it is viable.

   

 
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