Major Ports Authority Bill 2020

WHY IN NEWS?

The Cabinet has given its nod to Major Ports Authority Bill that will replace a 1963 law governing country's 12 major ports.

Ports in India- A snapshot

• There are 12 major ports in the country; 6 on the Eastern coast and 6 on the Western coast. Further there are about 200 non-major ports.
• The 12 major ports in the country have a combined total capacity of 1,065 million metric tonnes (MMT), while the capacity at non-major ports is roughly 700MMT

Challenges faced by Existing Indian Ports:

• High turnaround times-Ports in India suffer from high turnaround times for ships. For example, in Singapore, average ship turnaround time is less than a day. However, in India, it is over two days.
• Port congestion:Port congestiondue, container volume,shortage of handling equipment and inefficient operations is a major concern.
• Limited Hinterland Linkages: There is inefficiency due to poor hinterland connectivity through rail, road, highways, coastal shipping and inland waterways.
• Lengthy inspection and scrutiny: Though customs operations in India are rapidly going paperless and converting to digital, inspections and scrutiny continue to be lengthy for cargo and other shipping operations.
• Most Indian ports lack of equipment for handling large volume.
• During the operation of ports, spillage or leakages from the loading and unloading of cargo and pollution from oil spills are common due to poor adherence to environmental laws and standards.
• Manpower and Labour Issues:Lack of adequate training, falling manpower quality, opposition to reform are major issues.

Genesis of the problem arises from the rigid and complex regulatory framework currently put in place in the country.

Port regulation in India – Need for revamping existing structure.

• The major problem with regulation is that major and non-major ports fall under different jurisdictions. Further, the regulatory framework is rigid.
• Major ports are under the jurisdiction of the Government of India and are governed by the Major Port Trusts Act 1963, except Ennore port, which is administered under the Companies Act 1956. The ports act as semi-autonomous bodies under the administrative wing of the Ministry of Shipping.
• Non-major ports come under the jurisdiction of the respective state Governments’ Maritime Boards (GMB).

• The major port sector has not seen the required level of fixed assets creation to pare the country’s high logistic costs.
•  This is due to legacy issues including the Tariff Authority for Major Ports (TAMP)’s archaic regulatory grip.
• One reason why investment in port services via the PPP route has not been very remunerative for the private investors is the high revenue share, that port trusts used to take.

To provide autonomy to India’s major ports and improve their efficiency and competitiveness, the government gave the nod to Major Ports Authority Bill to replace the 1963 law governing the sector. The Bill was once introduced in the Lok Sabha in 2016 and thereafter referred to the Parliamentary Standing Committee but got lapsed after the dissolution of the previous Lok Sabha.

Key Highlights of the Bill

• The Bill provides for the creation of a Board of Major Port Authority for each major port. The major functions of the Board of Major Port authority include:
  1. The Board can use its property, assets and funds as deemed fit for the development of the major port.
  2. Under the Bill, the Board or committees appointed by the Board will determine rates for assets and services available at the port. Under the 1963 Act, it was done by the Tariff Authority for Major Trusts.
  3. Under the 1963 Act, the Board has to seek prior sanction of the central government to raise any loan.  Under the Bill, to meet its capital and working expenditure requirements, the Board may raise loans from any (i) Indian scheduled bank or financial institution, or (ii) any financial institution outside India that is compliant with all the laws.
• The role of Tariff Authority for Major Ports (TAMP) has been redefined as Port Authority has now been given powers to fix tariff.
• It noted that the Bill provides the government more flexibility and power to allow private players in the port sector.
• It recommended that the Ministry should address stakeholder concerns regarding the possible full privatisation of ports in future.
• The Bill provides for the central government to create an Adjudicatory Board. Functions include:
  1. Certain functions being carried out by the Tariff Authority for Major Ports.
  2. Adjudicating on disputes or claims related to rights and obligations of major ports and PPP concessionaires.
  3. Reviewing stressed PPP Projects
  4. Looking into complaints recieved from port users regarding port services.

• The Board of each Major Port shall be entitled to create a specific master plan in respect of any development or infrastructure within the port limits.

Significance:

• The proposed law will enhance the overall efficiencies of the ports.
• It will provide more operational autonomy to ports and fast decisions will be possible at a port level only.
• This will not only boost India’s EXIM(export-import) trade but generate employment.
• It will promote the expansion of port infrastructure and facilitate trade and commerce, by infusing professionalism in the governance of major ports.

          The regulatory regime will become less complex and less rigid once the bill becomes an act. It will leads to vertical integration of all stakeholders for holistic development of ports in India.Such measures are inevitable for  the success of the objectives viz, port modernisation and new port development, port connectivity enhancement, port-linked industrialisation and coastal community development under the Sagarmala project which has an immense scope for reduction in transportation and logistics costs and boosting export competitiveness.

Practice Question

Q. What are the various challenges faced by the port sector in India? How the proposed Port Authorities Bill will help to overcome such concerns?