Ports - Policies & Legal Framework
Ports - Policies & Legal Framework
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Indian Port Sector at a Glance
§ India along its coastline of 7,517 km, has
13 major ports. Major Ports, India
Haldia
§ Indian ports handle 95 per cent of India’s
Mumbai Paradip
Jawahar lal Nehru
total foreign trade in terms of volume Port
Vishakhapatnam
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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.
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Legal frame work
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Milestone – Indian Ports
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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.
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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.
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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.
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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.
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Draft Maritime Policy
• 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%.
–
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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.
–
–
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Contd..
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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.
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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
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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
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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;
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•
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
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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
•
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Port wise Status Of NMDP Projects
Issues and Strategy for 11th Plan (Ports)
• Capacity Augmentation
• Institutional Reforms
• Corporatization
• IT in Ports
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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
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
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
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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)
Million Tons
Landmarks in Port Development
Landmarks in Port Development
Snapshot - Pipavav
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Snapshot – Dahej LNG teminal
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Snapshot – Hazira LNG Terminal
Snapshot - Mundra
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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
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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
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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
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