Theoverall progress in ports sector has been much below expectations. The investments during the Eleventh Plan are now projected at a level of Rs 40,647 crore which is less than half of the original projection of Rs 87,995 crore. Private investment in the port sector is also expected to be almost 40.31 per cent lower as compared to the projections made at the beginning of the Plan. This is because very few PPP projects have been awarded by the respective Port Trusts in the first two years of the Eleventh Plan. A Deloitte knowledge paper released at FICCI’s national Conference on Ports & Shipping 2011 highlights that,howeverin the last few years, the Ministry of Shipping has introduced several policies and legislation envisioning faster growth by streamlining its operations.
“These policies would have a direct bearing on the ports and the shipping industry and it is hence imperative for the stakeholders in this industry to assess the implications of these policies and strategise taking the best advantage of them”, said Hemant B. Bhattbhatt, Senior Director, Deloitte in India. “The Captive Port Policy, the Land Policy for Major Ports, the Ports Bill, Port Regulatory Authority Bill and Coastal Shipping Policy are some very pertinent documents meriting review and reaction from the industry.”
Of the various proposed policy changes, Corporatisation of ports that isexpected to change the status of Major ports from Port Trusts to Port Companies with Limited Liability and getting registered as corporate bodies,will invite enthusiastic debates.The industry is divided in its views of corporatisation of ports leading to questions on - can corporatisation objectives be achieved differently? If so, why have they not been achieved so far? Is corporatisation a preludeto privatisation? Is corporatisation of port trusts desirable from port sector reform perspective?How should labour issues be dealt with in this context?
The idea of corporatisation in India is almost more than a decade old but the implementation is very slow paced. While JNPT, NMPT and Tuticorin Port Trusts were the ones originally considered for corporatisation, the first corporatised port of India is Ennore Port. Currently JNPT is expected to be corporatised followed by the other two ports after analysing the success of corporatisation.
To the credit of the Government, building transshipment hub like the one at Kochi through a PPP model will help Indian business save substantial cost and time in transportation of exim containeRs
Moving to the shipping sector, India has one of the largest fleet and is ranked 16th in the world. The total fleet size of the Indian shipping industry is 10 million GT. Still it forms a marginal share of only 1% of the global fleet. On the other hand, India’s seaborne trade has been growing at a rate of over 12% in the last 10 yeaRs Consequently, the share of India’s vessels in carrying country’s cargo has been declining and is currently only around 8%.
“Above statistics raise serious concerns about the problems faced by the Indian shipping industry. One of the main reasons for the declining share of India’s fleet is the tardy growth in its size. The Indian shipping tonnage needs to grow at a much faster pace and match the growth of country’s seaborne trade”, said Hemant.
Though 100 per cent FDI in shipping has been allowed since the late 90s, no worthwhile foreign investment has taken place due to the high taxes and rigid regulations like manning norms in India. Indian shipping is presently subjected to 12 direct/indirect taxes over and above the tonnage tax that add to its costs thereby increasing the effective tax rate of around 2 per cent under the tonnage regime to around 9 per cent.
Further, the Industry is grappling with a variety of issues like global economic turmoil / slowing down, induction of new fleet every year, looming threat of piracy, impending redundancy of single hull ships, increasing ship sizes, problems of higher pre-berthing detentions and poor turnaround times at Indian ports. Hemant further adds that,as such the profitability of the industry is under constant pressure and will require a significant global economic recovery, to be restored. This is likely to take anywhere from 2 to 3 yeaRs
On the other hand,lack of proper connectivity has affected the growth and prospects of many ports. Despite having proper depth and adequate facilities, these ports are stranded for the want of containerised cargo, while the other ports are burdened with an excess they can’t handle. The private players (coal traders, other manufacturers cum exporters/importers) give considerable weightage to connectivity at the proposed port while considering a stake in port development.
Discussions on connectivity should not be restricted to rail and roads alone. India has navigable inland waterways of almost 14,500 km, of which 5,200 km of major rivers and 500 km of canals are suitable for mechanised crafts. Currently Inland waterway transport (IWT) handles only around 1% of total inland cargo transport. Around 5% of Iron ore and 15% of the fertilisers is transported via the IWT route. “There is potential for other cargo such as coal, dry & break bulk and containers to be transported economically and effectively through IWT.Inland Waterways is environment-friendly and low cost. It has higher fuel efficiency than road/rail transport,” said Hemant B Bhattbhatt.
