Bangalore/New Delhi: Major ports owned by the Indian government and cargo handlers at these harbours may soon be able to set their own rates like the ports owned by the coastal states, an official panel suggested last week.
“The panel has decided to recommend that the major ports should be given the freedom to set rates based on market forces, with proper checks and balances and to amend the Major Port Trusts Act, 1963, for this purpose,” said an official who attended the Thursday meeting.
If the recommendation is approved and implemented, it will create a level playing field between the ports owned by the central and state governments.
The committee, led by B.K. Chaturvedi, member, Planning Commission, and comprising representatives from the shipping ministry and state governments, concluded its deliberations on 19 July. It will submit its recommendations to the government in the next few days. The group was established earlier this year to decide on port regulation on the basis of the draft Port Regulatory Bill, 2011.
Major ports and private firms said the move was a step in the right direction.
“TAMP (Tariff Authority for Major Ports) was set up at a time when there was no competition,” said a spokesman for the Indian Ports Association (IPA), a body representing the major ports. “There is better free-market play now in the ports sector with the opening of several new ports and private terminals and, hence, lesser chances of monopolization. So the time is right to leave tariff setting to market forces.”
“There is no need to regulate ports, whether major or non-major,” said S.S. Kulkarni, secretary general of the Indian Private Ports and Terminals Association (IPPTA), a private ports lobby. “The port privatization initiatives started by the government in 1997 have paid rich dividends. This is well manifested in the rapid rise in cargo handling. The performance and service levels offered by private ports and terminals compare favourably with the best facilities in the world. Is there, therefore, a need to regulate the sector when the market forces are driving fierce competition, both inter-port as well as intra-port? The fear of monopoly no longer exists. Any further progress in the sector can now only come through less and less legislation.”
Significantly, the panel has overturned a shipping ministry move to bring ports owned by state governments also under regulatory ambit. State governments had opposed the plan, forcing the government to set up an inter-ministerial panel to decide on port regulations. “The panel is not recommending that. It is a closed chapter now,” a second official who attended the meeting said. “We don’t want to take a retrograde step by bringing ports owned by the state governments under a regulatory regime.”
Both officials spoke on condition of anonymity because the recommendations of the panel have not been made public yet.
A shipping ministry spokesman confirmed the development. The spokesman said the 12 major ports have been seeking permission to set their own rates based on prevailing market prices to compete with ports owned by coastal states, which already enjoy the freedom.