Facilitating trade in Indian ports

The Central government must either build and maintain infrastructure for handling desired capacities or undertake relevant policy reforms

May 04, 2016 03:14 am | Updated 03:14 am IST

The Indian port sector plays a vital role in sustaining growth in the country’s trade and commerce. It also has an important role in fulfilling India’s dream of achieving greater global engagement and integration with its trading partners. Much of India’s port-led development initiative is expected to revolve around growth in maritime trade, given its share in terms of both volume and value in the country’s overall trade statistics. Recognising the important role port-led development can play in India, the Central government has undertaken several initiatives such as development of new ports, modernisation and mechanisation of the existing ones, and reduction of logistics costs through the implementation of increased waterways transport. These are also in line with the vision of initiatives such as ‘Make in India’.

Case studies

A recent study by the Bureau of Research on Industry and Economic Fundamentals (BRIEF) titled ‘Bridging Infrastructural Deficits at Select Trade Ports in India’ observed that seaports displayed specific patterns of issues based on differences in geography, infrastructural capacity, operational aspects, contractual arrangements, and so on. Such issues, though unique to certain ports, form important case studies for the Indian port sector as a whole. For instance, the Haldia Dock Complex in Haldia, West Bengal, being a riverine port, faces the natural challenge of heavy siltation and inadequate dredging capacities. Consistent reduction in draft over the years and widening differences in average drafts recorded during summers and winters highlight the importance of regular dredging, especially in the case of riverine ports. The issue of semi-mechanisation and manual handling of critical processes having a cascading effect on overall operational efficiency is evident at another eastern port — the Paradip Port in Jagatsinghpur district of Odisha. The process of unloading from ships to evacuation through rakes entails the use of outdated equipment — cranes and grabs with low-evacuation capacity — and is impeded with operational glitches such as the process of manual loading of cargo on rakes. The Paradip example highlights the importance of complete mechanisation of processes to ensure seamless operations and thereby lower down vessel turnaround time.

Congestion at the approach roads is a common problem observed at quite a few Indian ports. However, this problem gets exemplified at the Jawaharlal Nehru Port in Maharashtra, the most important port serving northern India. The study findings report heavy congestion en route to the port as well as inside the port, leaving trucks stranded for days — with queues extending to as long as 12 km — thereby leading to inordinate delays and increased transaction costs.

Apart from infrastructural and operational issues, some of the ports provide insights into certain regulatory and policy aspects that deserve attention. For example, the royalty/revenue share issue at the V.O. Chidambaranar Port (VOCPT) — between the private terminal operator (PSA-Sical Terminals Ltd.) and the port trust (VOCPT) — can be seen as a classic example providing incisive details as the country takes forward its port privatisation programme in the years to come. The prolonged tryst between the terminal operator and the port authorities over royalty coupled with contractual ambiguities — in one of the earliest ventures since the Indian port sector opened the gates to private operators — has continually marred infrastructural utilisation, restructuring and modernisation as well as operational improvements at the terminal.

Underutilisation of physical infrastructure in particular though is extremely prevalent at another private terminal — the Vallarpadam International Container Transhipment Terminal — at the Cochin Port. The terminal, operated under the public-private partnership arrangement, displays a far from par capacity utilisation of merely 30 per cent. Seen as a major initiative towards bringing back transhipment cargo to the country and a key driver as far as overall revival of the port was concerned, the terminal has been far from achieving both the objectives over the years. The major issue faced at the port, however, is its tariff structure. The tariff determined for the port by the Tariff Authority for Major Ports (TAMP) was reported to be almost three times that of other major ports, which renders the port uncompetitive with respect to its southern competitors such as VOCPT and Chennai Port. Underutilisation and lower volumes of cargo handled are the major reasons cited behind such inflated tariff, which again leads to further reductions in cargo traffic handled, forming a vicious circle with serious implications on the growth prospects of the port.

Bolstering prospective ventures

As India eyes a resurgence in port-led activities in the country, these issues, though specific to certain ports, indicate the need for the Central government to undertake measures to facilitate trade through Indian ports, either in terms of building and maintaining infrastructure for handling desired capacities or undertaking relevant policy and regulatory reforms. In terms of infrastructure, it is important to maintain draft to serve bigger vessels, ensure mechanisation of ports through introduction of new equipment and procedures, build new facilities, upgrade existing facilities and automate systems/procedures. In terms of policy and regulatory reforms, it is important to streamline tariff determination by TAMP along with a provision for periodic revisions, ensure transparent and effective contractual arrangements in PPPs, implement strengthened communication platforms for seamless information flow among stakeholders, strengthen system integration, ensure paperless clearance of procedures and transactions, develop user information portals, and so on. Apart from reviving the ports currently operational, these measures, if duly incorporated, promise to sufficiently bolster prospective ventures as the country moves towards an optimistic maritime trade regime.

Afaq Hussain is Director and Samit Chakraborty is Project Manager at Bureau of Research on Industry and Economic Fundamentals, New Delhi. Views expressed are personal.

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