The Ministry of Ports, Shipping and Waterways (MoPSW) is planning the expansion of port capacity through the implementation of well-conceived infrastructure development projects. It is adopting a package of recommendations to cut time and costs. This includes digitisation of processes to reduce and finally eliminate human interface and address environment-related concerns. At a recent media interaction, Dr Abhijit Singh, Executive Director, Indian Ports Association, talks about the initiatives taken by the government to increase the competitiveness of Indian ports. Excerpts…
The Major Ports Authorities (MPA) Bill was passed by Parliament in February 2021. The new MPA Act intends to revamp the administration, control and management of major ports in India. The role of the Tariff Authority for Major Ports of tariff determination has been done away with and ports would be free to set their tariff based on market forces. Public-private partnership (PPP) operators will be free to fix tariffs based on market conditions. The board of the port authority has been delegated the power to fix the scale of rates for other port services and assets. The impact of the proposed changes in tariff fixation will be enormous as they will create inter-port competition. Also, once the ports are empowered for tariff fixation, they will be in a better position to take on markets with nearby non-major ports handling similar cargo. The bill also provides for the formulation of an adjudicatory board that will adjudicate disputes among major ports, PPP concessionaires and captive users. Further, the act aims to decentralise decision-making and infuse a professional approach for the governance of ports.
On February 5, 2020, the Union Cabinet gave in-principle approval for setting up a major port at Vadhavan near Dahanu in Maharashtra. To be developed on the landlord model, the total estimated cost of the project is Rs 655.45 billion. A special purpose vehicle (SPV) will be formed with the Jawaharlal Nehru Port Trust (JNPT) as the lead partner with equity participation equal to or more than 50 per cent to implement the project. The SPV will develop the port infrastructure, which will include reclamation, construction of breakwater and establishing connectivity to the hinterland. All business activities would be undertaken in PPP mode by private developers.
A logistics data bank service under Delhi Mumbai Industrial Corridor Development Corporation Limited has been implemented at major ports for enabling track and trace movement of export-import (exim) containers. Further, an enterprise business system is being implemented at five major ports – Mumbai, Chennai, Deendayal, Paradip, Kolkata (including Haldia) ports – with a project cost of approximately Rs 3.2 billion. The aim is to create a digital port ecosystem that will adopt leading international practices without losing its alignment to existing local needs.
A centralised web-based port community system (PCS) has been operationalised across all major ports to enable seamless data flow among various stakeholders through a common interface. To move towards a completely paperless regime and an electronic delivery order through PCS was made mandatory along with e-invoicing and e-payment. An upgraded version, PCS 1x, was launched in December 2018. Several new functionalities focused on improving the ease of doing business (EoDB), like e-DO, e-invoicing and e-payment, were added in PCS 1x. e-DO through PCS 1x was implemented only for direct port delivery (DPD) containers, but now has been extended to deliveries made by all custodians like terminals, container freight stations (CFSs)/inland container depots and other non-major ports using PCS 1x. Further, the process to bootstrap PCS 1x into National Logistics Portal-Marine (NLP-Marine) is already under way. It will act as a unified digital platform for all maritime stakeholders. The NLP Marine + PCS 1x platform is envisaged as a central hub for all interactions with various stakeholders – ports, terminals shipping lines/agents, CFSs and customs brokers, importers/exporters, etc.
“As part of MIV 2030, ports are expected to enhance their infrastructure to a world-class standard to become smart.”
Moreover, to streamline the process of scanning and reduce the time for scanning and checking of containers, eight mobile X-ray container scanners (in addition to the four existing X-ray container scanners previously installed by customs) have been installed recently at various major ports. Currently, the majority of the ports are well equipped with specialised equipment to handle specific commodities. Other technology interventions such as automatic berth allocation, plot/yard planning, and linking of rail booking with port systems, which are a part of state-of-the-art terminal operating systems, are helping ports improve their operational efficiencies.
Besides, the existing model concession agreement, 2018, has been revised considering the change in policy environment due to the enactment of the MPA Act, 2021. The provision of further flexibility to respond to dynamic market and regulatory conditions is being explored. Besides, many provisions have been provided or modified to cater to the changing environment and develop a conducive atmosphere around PPPs to boost investment.
The above and many other such ongoing initiatives have led to tremendous results in the past couple of years. India’s ranking under the trading across border parameter of EoDB improved from 130 in 2017 to 63 in 2020, among 190 countries. The capacity at major ports has almost doubled from 880.52 million tonnes per annum (mtpa) in 2014 to 1,560.61 mtpa in 2021. Performance-related parameters have also improved significantly at major ports. For example, the average turnaround time for container vessels has come down to 33.41 hours in 2021 from 44.64 hours in 2016. Meanwhile, the average berth day output increased to 16,419 tonnes in 2020 from 12,468 tonnes in 2014.
These ongoing initiatives will also help India achieve the $400 billion export target for 2021-22 by ensuring a streamlined flow of cargo through ports. One of the key measures towards the exim procedure is direct port entry (DPE) and DPD. The percentage of DPD at JNPT increased from 5.42 per cent in April 2016 to 56.72 per cent in 2019-20 and further to 59.74 per cent in 2020-21. Meanwhile, the percentage of containers cleared at JNPT under DPE was 50.52 per cent in 2019-20 and 47.63 per cent in 2020-21.
The Indian maritime sector has already demonstrated its resilience by dealing with the pandemic head on through innovation and collaboration. Because of the pandemic, the port and shipping industry faced significant challenges such as demand shock and movement restrictions. But the industry showed its resilience by mitigating the effect of this crisis through innovation and collaboration. Digitisation efforts at ports, which were going on prior to the pandemic, were accelerated at a much faster speed. Trade documents were handled online so as to minimise the physical movement of manpower. Other technological inductions such as e-pass modules for sign-on, sign-off and data verification of seafarers led India to handle the highest number of crew changes in the world amid the pandemic. Maritime training, learning and certification exams were made online. Ship registrations and charter licensing were also done online. Now supply chains are moving towards a more and more integrated and connected network at an unprecedented rate.
Further, with the objective of propelling India to the forefront of the global maritime sector, the MoPSW has prepared the Maritime India Vision 2030 (MIV 2030), a blueprint to ensure a coordinated and accelerated growth of India’s maritime sector in the next decade. To develop global standard ports in India, MIV 2030 has identified initiatives such as development of world-class mega ports and transshipment hubs, and infrastructure modernisation of ports. MIV 2030 estimates the development of Indian ports to drive cost savings to the tune of Rs 60 billion-Rs 70 billion per annum for exim clients and help unlock Rs 700 billion- Rs 750 billion worth of potential revenue. Further, the augmented operations are estimated to create an additional 700,000-1,000,000 jobs in the sector.
MIV 2030 estimates investments of Rs 1,000 billion-Rs 1,250 billion for capacity augmentation and development of world-class infrastructure at Indian ports. Of this, the major ports alone need to undertake 423 mtpa of capacity addition with a total investment cost of over Rs 334 billion, of which approximately 95 per cent capacity expansion is likely to be planned in PPP/captive mode. Therefore, there is a huge opportunity for private investors, including foreign investors, in the Indian port sector in the next 10 years.
As part of MIV 2030, ports are expected to enhance their infrastructure to a world-class standard to become smart. They will be using automated devices, internet of things, and leveraging analytical technologies for safer and more efficient management of resources. By the year 2030, major ports are envisaged to be multimodal, connected hubs, playing a major role in India’s growth. There exists a critical need for coordination and governance for the digital transformation of major ports. The ability of each major port to successfully meet digital challenges would improve substantially with the institution of a centralised digital centre of excellence for proper e-governance.