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Ports - Policies & Legal Framework

The document outlines India's major port sector and legal framework, noting there are 13 major ports governed by the Major Port Trust Act along with 187 minor ports mostly governed by state governments. It discusses policies around private sector participation, land use, dredging, and regulatory issues. The draft maritime policy proposes measures to increase efficiency, promote competition, and strengthen the regulatory framework for India's port sector.

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Saurabh Suman
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0% found this document useful (0 votes)
577 views56 pages

Ports - Policies & Legal Framework

The document outlines India's major port sector and legal framework, noting there are 13 major ports governed by the Major Port Trust Act along with 187 minor ports mostly governed by state governments. It discusses policies around private sector participation, land use, dredging, and regulatory issues. The draft maritime policy proposes measures to increase efficiency, promote competition, and strengthen the regulatory framework for India's port sector.

Uploaded by

Saurabh Suman
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Presentation on

Policies & Legal Framework


– Port sector

1
Indian Port Sector at a Glance
§ India along its coastline of 7,517 km, has
13 major ports. Major Ports, India

§ 12 major ports are Port Trusts, governed


by the provisions of Major Port Trust
Act and 1 major port is a corporate port.

§ There are 187 minor and intermediate


ports out of which, 41 minor ports are
Kandla
based in Gujarat. Kolkata

Haldia
§ Indian ports handle 95 per cent of India’s
Mumbai Paradip
Jawahar lal Nehru
total foreign trade in terms of volume Port
Vishakhapatnam

and 70 per cent in terms of value. Major Ports


Marmagoa Ennore

§ Indian ports handled cargo of 720 million New


Chennai
Mangalore
tonnes in 2007-08, a 11% increase Cochin
Tuticorin
over 2006-07
Source: Indian Port Association, National Maritime Development
Program
2
Indian Port Sector Scenario
• At the central level, the Department of Shipping of the
Ministry of Shipping, Road Transport and Highways
(MoSRTH) is responsible for formulating policies and
overseeing the sector.

• At the state level, the maritime boards oversee non-major


ports in Gujarat, Maharashtra and Tamil Nadu. In other
states, port departments of the respective state
governments oversee non-major ports.

3
What is Major and Non-Major ports
• The Indian port sector has been broadly divided into - Major ports and Non-
major ports.
• The technical nomenclature Major and Non-major is based on the legal
distinctions made under the two key source laws viz. Indian Ports Act 1908
and Major Ports Act 1963.
• The distinctions between the Major and Non-major Ports is in terms of the
distribution of maritime jurisdiction between the Central and State
governments.
• Major ports are listed in serial 27 of the Constitution and are administered
under Major Port Trust Act of 1963. All ports, other than major ports are
listed under the concurrent list of the Constitution and administered jointly
by Central and State governments under the Indian Port Act 1908.

4
Legal frame work

5
Milestone – Indian Ports

6
Contd….
• Tariffs at major ports are regulated by the Tariff Authority for Major Ports (TAMP), non-major ports
determine their own tariffs.
• The MoSRTH regulates the industry through various autonomous bodies – the National Shipping
Board, the Directorate General of Shipping and the Mercantile Marine Department.

• Ports
• In 1998, the foreign direct investment (FDI) limit in the port sector was raised to 74 per cent and
subsequently, in 1999, 100 per cent FDI in the sector.
• In 1998, the shipping ministry came out with Guidelines for Private Sector Participation in Ports”
through JVs and foreign collaborations.
• In 2000, the Major Port Trusts Act, 1963 was re-amended to allow major ports to form JVs with non-
major foreign ports and companies.
• During 2003, Rail Vikas Nigam Limited (RVNL), a Special Purpose Vehicle (SPV), was created to
undertake rail-port connectivity projects under the National Rail Vikas Yojana (NRVY) which
was initiated in 2002.

7
Contd…
• In August 2004 - Formulation of the Draft Maritime Policy. The draft maritime policy,
which is still awaiting final cabinet approval, has been partially implemented.
• In July 2004, the ISPS Code, which is a set of regulations designed for maritime security,
came into force.
• Sethusamudram Ship Canal Project (SSCP) and the National Maritime Development
Programme (NMDP)- were launched in 2005, in May and December respectively.
• The Rs 993.44 billion NMDP aims to increase capacity levels, enhance private
investment, improve service quality and promote competition in the maritime sector.
• In January 2006 beginning of port based SEZ - approval of Vallarpadam and
Puthuvypeen within the Cochin Port Trust area
• The main highlight of 2008 was the approval of the new model concession agreement
(MCA) by the union government in January.

8
Contd…
• Shipping
• The introduction of tonnage tax in August 2004 was a major boost. The
benefits of deductions allowed under Section 33AC were withdrawn but
tonnage tax was introduced that allowed shipping companies to opt for
paying tax on profits calculated at a notional rate per tonne. This reduces
tax incidence to around less than 2 per cent of operating income although
the tax has to be paid even if there are losses.
• Tonnage tax encouraged shipping companies to expand fleets. The positive
effect was visible in the first year itself, Shipping tonnage increased from
7.69 million GRT (as on December 31. 2004) to 8.29 million GRT (as on
December 31, 2005). In 2005- 06, dredgers were also included under the
tonnage tax regime.

9
Contd…
• Another achievement on the policy front was the Marine Hull Policy,
2004 that covers any loss or damage to ships.
• A recent policy development has been formulation of the draft Cruise
Shipping Policy on June 27, 2008. The policy envisages hassle-free
customs clearance and a dedicated cruise shipping terminal, among
other measures.

10
Draft Maritime Policy

• PRIVATE SECTOR PARTICIPATION


– Inter-port and intra-port competition.
– Generally by tender; provision for nomination for captive facilities.
– Obligation to take workers in case of lease of existing facilities.
– Provision to handle operations outside strikes / breakdowns, etc.
– Preference to Indian companies except in few ports.
– Trade to be consulted before charges affecting them are amended.

• LAND MATTER
– Full powers to ports for leasing of land up to 30 years.
– Ports to be allowed to renew lease in favour of sitting occupants.
– Provision for subletting / partially subletting.
– Port Land not to be given for religious purposes.
– Change of land use as per land use. be allowed.
– Annual escalation reduced from 5% to 2%.

11
Contd..
• DREDGING ISSUES
– Ports to invite tenders, instead of nomination to DCI
– Contract for longer periods (3 years)
– Right of first refusal to Indian companies, within certain band
– DCI at par with other Indian dredging companies.
• REGULATORY FRAMEWORK
– TAMP will be strengthened.
– Cost plus approach will be replaced by normative approach.
– Increase in efficiency by the private investor to be rewarded.
– Enforce and extend ISPS code implementation and adhere to IMO Conventions
– Measures for Wreck Removal, Oil Spill Management at Ports consistent with
international norms.


12
Contd..

• Manpower, Training and Industrial Relations


– Recruitment, Promotion, Training and Incentives to be rationalized
– Productivity Linked Reward for Port workers to be Port specific
– Wages to be worked out on the basis of Time and Motion studies.
– Stevedores to bring additional workers from open market.
• Organizational and Institutional Issues
– Set up Directorate General of Ports (Like DG Shipping)
– Corporatisation of Ports to be pursued
– Maritime States to set up Maritime Boards to be eligible for Central
Assistance
– Select Major Ports to be declared as SEZ
• Additional Issues
– Single Point Moorings can be outside major/minor ports.
– Increased coordination with other modes of transport
– Policy for Fisheries Harbours (Min. of Agriculture) to be integrated with
Maritime Policy
– Develop Port Facilities/Terminals for promoting cruise tourism
– Enhanced interaction with Trade

13
National Maritime Development Program - NMDP
• Introduction:
– National Maritime Development Programme launched in December
2005
– Programme being formulated to enhanced private investment
– Utmost importance is given to development of Infrastructure
– This programme would assure a good framework for facilitating
Public and Private investments and competitions and improved
efficiency.

14
National Maritime Development Program - NMDP
• Focus Area :
– Deepening port channels - higher drafts
– Modernization of the system and usage of latest technology
– To exploit potential of hinterland
– Setting up Maritime Universities
– Promote training for better manpower
– Encouragement to inland water transport
– Development of sea waterways and SPMs through private sector
participation
– Enhancement of coastal shipping
– Navigational safety
– Ship building and repairing yard
– Minor ports have to play important role in creation of capacity

15
Recommendation of MSDC
• Capacity Augmentation Plans of Maritime States
• Setting up of Maritime Institutes in Maritime States/Uts Synergetic policy for
• Hinterland connectivity
• Implementation and up-gradation of IWT
• Recommendation Viability GAP funding Scheme
• Concessional Tax Regime
• Navigational Safety in Ports Committee (NSPC)
• All Maritime States which do not have Maritime Boards to constitute
Maritime Boards by April 2008
• Central Assistance For Dredging in Navigational Channel
• Coastal Shipping

16
Indian ports – Areas allowed for
private sector participation
• (a) Leasing out existing port assets;
• (b) Construction/creation of additional assets, such as:
• (i) Construction and operation of container terminals;
• (ii) Construction and operation of bulk, break-bulk, multi-purpose and
specialized cargo berths;
• (iii) Warehousing, container freight stations, and storage facilities;
• (iv) Cranage/handling equipment;
• (v) Setting up of captive power plants; Dry docking and ship repair
facilities.
•(c) Leasing of equipment for port handling and leasing of floating crafts from
the private sector;
• (d) Pilotage;
17

11th Five Year Plan - Shipping
Financial Performance of Shipping Sector in 10th plan

The total project outlet for 11th plan outlay for DoRTH is Rs. 122557 crores, at
current price

18
Private Sector participation – Major ports
• During 10th Five year plan, private sector schemes costing
Rs. 11257 cr. were identified
• Eight schemes costing Rs. 2435 cr. Have been completed
• Port Capacity addition of 44.40 Million tones
• Six schemes costing Rs. 3818 cr. Have already been
awarded to private operators, which will add 45.50 mil.
tonnes capacity
11th Five Year Plan – Ports Outlay
• 11th Plan Budgetary support for central sector ports is
Rs. 3749 cr. at current price
• Public investment of Rs. 3627 cr. Is expected in the
state sector
• Private sector investment of Rs. 36,868 cr. During 11th
plan

20
Port wise Status Of NMDP Projects
Issues and Strategy for 11th Plan (Ports)
• Capacity Augmentation

• Dredging – efficiency improvement

• Development of New Deep draft ports

• Improvement in labour Productivity

• Reducing Dwell time

• Risk Management system of customs

• Private sector participation

• Growth of Non-major ports

• Tariff Regulation (Suitable framework)

• Institutional Reforms

• Corporatization

• IT in Ports

• Up-gradation of Hinterland Connectivity

• 22
NATURAL HINTERLAND
OF GUJARAT PORTS
Background - Gujarat Port Sector
§ Strategically located with India’s longest
Gujarat : Strategic Location
coastline of 1600 km. Nearest maritime
outlet to Middle East, Africa and Europe

§ State has 42 ports - includes 1 major port


and 41 non-major ports

§ The state has favourable marine conditions


with medium to large tidal variation Main Ports of Gujarat

§ The first state in India to invite Private


Sector Participation through competitive Gujarat
bidding Mundra
Kandla

Navlakhi
Jamnagar
§ The first state in India to have Chemical Sikka
Okha
Terminal, first private port of India – Porbandar
Dahej
Pipavav, the world’s one of the largest
Pipavav Hazira
ship recycling yards at Alang, India’s Magdalla

first two LNG Terminals in India



24
Natural drivers
• Gujarati acumen for Business
• Longest coastline-1600 km
• Two Natural gulfs & deep waters
• Rich maritime history
• Strategic location
– Vast hinterland
– International sea route
• Rich mineral resources
• Emerging oil resources at Gujarat coastline
Economic drivers
• Mega Industrial development at Gujarat
coast
• Cargo potential and future shortage of port
capacity
• Requirement of specialized port facilities
• Increase in the ship size
• Change in cargo composition &
containerization
• Quality Roads & Rails infrastructure
Policy drivers
• Port Policy
• BOOT Policy
• GID Act
• Project framework
• Success stories of port development
• Political will


GMB Act - 1982
• The Gujarat Maritime Board (GMB) was the first autonomous state board set up in
1982 after the enactment of the Gujarat Maritime Board Act, 1981.
• It regulates all the minor ports in the state.
• ROLE:
– To harness the potential of 1600 kms of coastline of Gujarat to the
maximum possible
– To develop ports & port related infrastructure
– To plan for port connected infrastructure facilities like rail link, road network,
etc.
– To enhance Gujarat's share of international trade
– To facilitate port based industries in the state
• SERVICES:
– Contributes to the development of vital port infrastructure
– Identifies Greenfield ports for development
– Specifies missing links in roads and railways and suggests upgrading
existing links to facilitate easier approach to port locations
– Plans to establish a modern Maritime Institute in Gujarat
– Ship building and breaking activities
Development models
Private
Ports

Private Joint
Jetties Sector
Ports

State
Captive Public
Jetties Ports
Port Policy of 1995
• Seeks to integrate Port development with
Industrial development.
• Seeks to develop 10 greenfield projects
through PPP mode
• Privatization of port –related services.
• Private investment in existing ports
• To achieve 25% of the national traffic
Boot Policy – 1997
Build, Own, Operate & Transfer Concepts
§Privatedeveloper has to Build, Own, Operate &
Manage Port facilities
§Govt. will grant license/Concession
§Govt. will permit assets mortgage
§Assets will be transferred back to Govt. on
completion of BOOT period
§BOOT period can be extended on mutual agreed
terms

31
GIDB Act 1999
• Single window framework for infrastructure project - GID
Act
• Global competitive bidding
• Transparent selection procedure of developer
• Scope of State participation for initial stage development
or strategic partner
• Bankable project document – Model Concession
Agreement
• Scope for sub concession for development of specialized
port facilities 32
Gujarat Captive Jetties (BOMT)

Maritime Board Private/Jt. sector port (BOOT)

Private Jetties (BOT)

Port Terminal through JV (Equity share by GMB) partner

Existing port Terminal through Private Investment

Models of PPP Rail linkages


(Pvt, Invest./SPV with RVNL)

Formation of Dredging Company

Shipbuilding/repairing Yard (Cluster Development)

Coastal area development/Ro Ro

Private participation in supporting services


33
The state government has already played a strong
enabling role in the ports sector development
The state framed one of the earliest port The policy framework aims at building a
policy in the country competitive and transparent industry
• The GMB Act 1982 ■Port Project framework

•Single window framework for
• Highly successful – Port Policy – 1995 infrastructure project - GID Act
– Integrated port development
vision with private public •Global competitive bidding
participation •Transparent selection procedure
– Synchronization of small and of developer
large investor in port sector
– Creation of market driven port •Scope of State participation for
sector initial stage development or
• strategic partner
• BOOT Policy – 1997 •Bankable project document –
– Minimum role of State in Model Concession Agreement
development
– Maximum operational flexibility •Scope for sub concession for
with tariff freedom development of specialized port
– Maximum concession facilities
• Lowest water front •Scope for development of add on
royalty – single levy projects
of state government
• No business
development
restriction
• Adequate
compensation on 34
Traffic and Capacity Growth – GMB ports
Traffic growth of GMB ports
Commodity composition – GMB ports
GMB Traffic – Comparison with National
Ports

Million Tons
Landmarks in Port Development
Landmarks in Port Development
Snapshot - Pipavav

41
Snapshot – Dahej LNG teminal

42
Snapshot – Hazira LNG Terminal
Snapshot - Mundra

44
Snapshot - Mundra
Dahej – LNG terminal
Model Concession Agreement
• Allotment of land for 30 years lease for port development
• To develop port as per approved DPR
• To recover waterfront royalty on cargo handling at port
• Transfer of port after completion of BOOT period. BOOT period can be
extended on mutual agreed terms without any compensation
• Waterfront Royalty
– Straight Line Option
– Set off option (Now cancelled by GoG)
• Lease rent
– 10 % of land cost and escalation @ 10 % every 3 years
• Provision of Change in Law
• Provision for Force Meijure
• Provision for Arbitration

47
Pioneering development of Gujarat’s
minor ports
• First maritime board
• First maritime policy
• First private port & Model Concession Agreement
• First private container port
• First grassroot refinery based captive jetty
• Longest coastline and the first coastal development board
• First LNG terminal
• First Chemical port
• Biggest ship breaking yard
• Deepest draft port
• Highest throughput amongst the minor ports
• First double stack container train & the first private port rail company


Port led direct development
Refineries
Fisheries

Ship
Building Core
Industries

Capital
Goods Power
Projects

POL
Cement Chemical
Plants
Port led direct development
Port led indirect development
Roads DMIC
&
Rails

VTMS
Refineries

Logistic
Parks SEZs

PCPIR SIR
Port led indirect development
Port led other development
Area
Development
Warehouses

Cold
Chain Revenue
Generation

Green
Ancillary
Development
Industries

Employment
Tourism
Port led other development

• Regional Social and Economic Development


– Mundra, Pipavav, Dahej, Hazira
• Highest employment generation
• Efficient and maximum utilization state resources
through private sector participation
• New revenue resources for state
• Development of ancillary industries and secondary
service providers
• Highest revenue from Gujarat Ports to Central
Government – Custom, Excise and Service Tax
Issues
• Way behind international developments.
• Not a single port in top ten
• Severe connectivity issues
• No major shipping line in the country
• Poor levels of containerization
• Lack of seamless customs procedures
• Crippling man-power constraints
• Economy not export driven
• Hiatus between centre and State
THANK YOU

56

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