Setting the Stage: Government drives sector growth with Sagarmala

Government drives sector growth with Sagarmala

In the past two years, the Ministry of Shipping (MoS) has undertaken various measures that are expected to have a positive impact on the sector. In April 2016, the MoS held its first global investment summit, the Maritime India Summit 2016, which attracted investments of about Rs 830 billion from both international and domestic stakeholders. Of the total MoUs signed, over 85 per cent are on track.

The biggest development in the sector has been the launch of Sagarmala, the shipping ministry’s flagship programme, which aims to promote port-led development in the country. It has four major components – port capacity enhancement and efficiency improvement, hinterland connectivity, port-led industrial development, and coastal regional development. In April 2016, the MoS released the National Perspective Plan, prepared under the Sagarmala programme. The Sagarmala Development Company has also been set up to provide equity support to project special purpose vehicles and funding support to residual projects under Sagarmala which cannot be funded by any other means.

An international consultant appointed to benchmark Indian major ports against best-in-class global ports and suggest measures for efficiency improvements has submitted its report. Of the 110 initiatives identified, 70 have been implemented so far.

Lack of adequate connectivity is often cited as a major stumbling block for the port sector. To address this issue, projects worth over Rs 1 trillion have been initiated in the past year under Sagarmala. Once the Bharatmala project of the Ministry of Road Transport and Highways is approved, the Sagarmala programme will get a further impetus. Besides, ports in Gujarat and Maharashtra are expected to benefit substantially once the dedicated freight corridor is operational. The railways, however, need to build dedicated freight lines from the main production centres to ports.

For port-led industrialisation, the MoS plans to set up coastal economic zones (CEZs). The ministry in consultation with the Department of Industrial Policy and Promotion and NITI Aayog has decided to take up the development of two CEZs in the first phase. The master plans for the CEZs are expected to be ready in six months.

Ease of doing business is a major focus area of the government with steps in this direction being taken by all ports. Major ports are in the process of implementing radio frequency identification (RFID) gate automation systems and installing container scanners. They are expected to have RFID systems installed by March 2017 and container scanners by September 2017.

The MoS has also formulated the Central Port Authorities Bill, 2016, which aims to give more autonomy and flexibility to major ports in their functioning and will bring in a professional approach in their governance. Once the bill is approved, as far as tariff setting for future projects is concerned, the Tariff Authority for Major Ports’ (TAMP) role will be done away with and tariffs will be market-determined.

The ministry is also in the process of revamping the model concession agreement to provide equitable risk distribution between port authorities and private investors and to promote greater investments in the sector. Further, the MoS has taken up the issue of the reduction of fees and charges with TAMP.

Cabotage has been relaxed for special vessels such as roll-on, roll-off vessels, pure car carriers, liquefied natural gas carriers and over-dimensional cargo. The government has also relaxed cabotage restrictions for ports which transship at least 50 per cent of the containers handled by them.

On the shipping front, a financial assistance scheme for the shipbuilding industry was approved in 2016. Under the scheme, 15 requests have been made so far. Meanwhile to promote ship repair, tax issues hampering sector growth have been resolved to a large extent and some concessions have also been granted. The shipping ministry has also asked all major ports to provide ship repair facilities and Mumbai port is taking the lead in this direction.

In terms of information technology, the Indian Ports Association is in the process of awarding the tender for the implementation of the Port Community System Version 2. Further, ICEGATE 2 hardware is expected to be in place by March 2017 and stabilised by December 2017.

Inland water transport is another priority area. The government has declared 106 new national waterways, of which the development of about 30 waterways is likely to be taken up in the next three years.

Going forward, there is a need to speedily automate port and customs processes. A forum can be created within the Indian Ports Association, where good practices being followed at different ports can be shared on a quarterly basis.

Based on remarks by Rajive Kumar, Secretary, Ministry of Shipping, at a recent India Infrastructure conference