Progress Across the Board: Recent developments in the port sector

In the past year, the government has unveiled several initiatives aimed at developing the Indian maritime sector and sustaining its growth. To fast-track investment in the sector, a host of business-friendly policies have been introduced. As a result of these efforts, progress has been documented in project completion, award and the start of new construction works.

A snapshot of the recent developments in the port sector…

• In December 2016, the Union cabinet approved the Ministry of Shipping’s (MoS) proposal to replace the Major Port Trusts Act, 1963, by the Major Port Authorities Bill, 2016. The new bill will grant the major ports full autonomy in decision making and will modernise their institutional structure. This will in turn enable them to perform with greater efficiency. Earlier, in November 2016, the cabinet ap-proved the introduction of the revamped Merchant Shipping Bill, 2016, and simultaneously repealed the Merchant Shipping Act, 1958, and the Coastal Vessels Act, 1838.
• Giving a further boost to the sector, the MoS released the proposed new model concession agreement (MCA) in September 2016. The new agreement allows private players to exit port projects after six years and gives them the power to issue bonds to refinance debt. The new MCA, with 11 prominent changes, will replace the existing MCA that became effective in January 2008.
• The new Berthing Policy for dry bulk cargo for all major ports came into effect on August 20, 2016. The policy aims to reduce berthing time and overall turnaround time of ships, standardise anchorage charges, etc., at major ports. In July 2016, the MoS approved a policy for the award of waterfront and associated land to port-dependent industries at major ports.
• The New Captive Policy guidelines were issued in July 2016, to ensure uniformity and transparency in the procedure for awarding captive facilities at ports. This will allow the concessionaire to handle non-captive cargo of up to 30 per cent of the designed capacity of the berth.  The New Stevedoring Policy has been implemented since July 2016 in a bid to improve productivity, efficiency and safety at ports.
• To promote transshipment at Indian ports, the MoS allowed a relaxation in cabotage rules. Ports with container traffic less than 50 per cent of their total cargo can become transshipment hubs. This is applicable only to export-import (exim) or empty containers. Also, any new or existing port handling container transshipment traffic can apply for the relaxation to the Directorate General of Shipping.
• With the aim of replacing archaic laws hindering efficient governance, the Lok Sabha passed the Admiralty (Jurisdiction and Settlement of Maritime Claims) Bill, 2016, in March 2017. The bill aims to establish the legal framework to consolidate the existing laws relating to admiralty jurisdiction of courts, admiralty proceedings on maritime claims, arrest of vessels and other related issues.
• To address the problems associated with the ease of doing business at ports across the country, a committee constituted by the MoS suggested 10 key measures pertaining to customs, ports and other departments. Besides, a committee constituted by the joint secretary, customs, recommended 42 measures – 20 export-related measures and 22 import-related ones – for the reduction of dwell time of cargo clearance and the cost associated with the same.
• On the institutional front, the cabinet approved the incorporation of the Sagarmala Development Company on July 20, 2016. In April 2016, the MoS launched the National Perspective Plan under Sagarmala, under which 415 projects worth Rs 8 trillion are planned to be undertaken. The plan has been approved by the National Sagarmala Apex Committee.
• Six new port locations – Vadhavan, Enayam, Sagar Island, Paradip Outer Harbour, Sirkazhi and Belekeri – have also been identified as a part of Sagarmala. The required approvals have been obtained for setting up a major port at Sagar Island and the preparation of the detailed project report (DPR) is in progress. Besides, DPRs are also being prepared for the new ports at Paradip Outer Harbour, Enayam and Vadhavan. Meanwhile, the techno-economic feasibility report has been prepared for Sirkazhi and Belekeri ports.
• Connectivity has become a key focus area of the government. Indian Port Rail Corporation Limited (IPRCL), a special purpose vehicle formed to provide last-mile connectivity to major ports, had a portfolio of 26 projects involving an investment of Rs 57 billion, as of February 13, 2017. Of this, construction work has commenced on 10 projects worth Rs 3.4 billion, while for the remaining projects, DPRs are under finalisation or are being prepared. Meanwhile, one of the ambitious port connectivity projects of the National Highways Authority of India (under the National Highways Development Programme, Phase VII) – the 20 km long Chennai port-Maduravoyal elevated road project – also got approval from the MoS. Following this, in May 2017, the Tamil Nadu government approved its implementation.
• The sector witnessed some progress on the technology front as well. The MoS has instructed all major ports to implement the direct port delivery (DPD) facility, initially only to “accredited client programme” clients, and provide additional space for storage and clearance of DPD containers. The DPD scheme is being tested at the Jawaharlal Nehru Port Trust (JNPT) and, if successful, will be replicated at other major ports too. The port community system, a web-based, single-window platform message exchange gateway for port community stakeholders, has also been introduced at the 12 major ports and six non-major ports (Mundra, Dahej, Pipavav, Cuddalore, Krishnapatnam and Kakinada). In order to eliminate the manual checking of documents at port gates and allow the real-time tracking of the movement of vehicles, men and materials, the MoS had directed all major ports to implement radio frequency identification (RFID) systems. The system is fully operational at Paradip, Kamarajar, Cochin, JNPT and Mormugao ports and a trial run has been initiated at the Haldia Dock Complex. Meanwhile, the process of installation of RFID systems at the remaining major ports is presently in progress.
• With a view to providing transparency in exim container movement, the MoS directed the major ports to implement the logistic data tagging of containers. JNPT became the first major port in the country to commence the logistics data bank (LDB) service, on July 1, 2016. Recently, Delhi-Mumbai Industrial Corridor Development Corporation Logistics Data Services Limited launched the LDB project across the port terminals of Mundra and Hazira. The container terminals which are being covered are the Mundra International Container Terminal, the Adani Mundra Container Terminal (container terminal [CT]-2), Adani International Container Terminal (CT-3), Adani CMA Mundra Terminal (CT-4) and Adani Hazira Port Private Limited.
• Several non-major ports have also deployed new technologies. On February 9, 2017, APM Terminals Pipavav implemented the electronic sub-manifest transshipment permit facility at its port for paper-free customs clearance. Earlier, in January 2017, Krishnapatnam Port Company Limited installed the first baggage scanner system at the port.
• Major ports have also recorded the highest ever capacity addition of 100.37 million tonnes during 2016-17. The capacity of major ports during 2015-16 was 965.36 million tonnes per annum (mtpa) and crossed 1,065 mtpa during 2016-17.
• Capacity was added at Mundra port with the commencement of commercial operations at its fourth container terminal, the Adani CMA Mundra Terminal. The terminal has a capacity to handle 1.3 million twenty-foot equivalent units (TEUs) of cargo. With the opening of the terminal, the container handling capacity of Mundra port has increased to 5.5 million TEUs.
• In terms of award, 56 projects with a capacity of 103.52 mtpa were awarded at major ports during 2016-17. These projects are estimated to entail an investment of Rs 94.91 billion.
• The past year saw the award of some major dredging projects. JNPT awarded the contract for deepening and widening of the JNPT channel and the Mumbai harbour channel (Phase II) to the joint venture of Royal Boskalis Westminster N.V. and the Jan De Nul Group. The contract value is Rs 19.63 billion. The Kolkata Port Trust awarded the contract for maintenance dredging for a period of five years, commencing from January 2017, to the Dredging Corporation of India. The contract value of the project is Rs 11.19 billion.
• The contract for maintenance dredging at Karaikal port was awarded to Mercator Limited. The contract value is Rs 150 million and dredging is expected to be completed during 2018.
• The year also witnessed the commencement of construction work of the much-awaited Rs 75.25 billion Vizhinjam international container transshipment terminal. The Kerala government inaugurated the construction of the first berth of the terminal in May 2017. The project involves the development of the state’s first deep-water container transshipment port with a draught of 20.5 metres.
• Foundation stones for some important projects were also laid during the past year. These include those for the development of general cargo berth nos. 14 and 16 (other than liquid/container cargo) at Kandla port, at an investment of Rs 1,554.53 million and Rs 1,614.46 million respectively; eight port-connectivity projects worth Rs 11.17 billion at JNPT; the fifth oil berth at Jawahar Dweep in Mumbai Harbour involving an investment of Rs 8.11 billion, among others.
• Some developments were also witnessed on the financial front. JNPT signed an agreement with the State Bank of India (SBI) and the Development Bank of Singapore (DBS) for external commercial borrowings worth $400 million ($300 million from SBI and $100 million from DBS) to improve its infrastructure. Also, Adani Ports and Special Economic Zone Limited raised Rs 10 billion through the allotment of non-convertible debentures on a private placement basis.