Author: Bhriti Mackdani
Second Year LLB
VES College of law Mumbai
7516.6 kilometres is the coastline of India which forms one of the biggest peninsulas in the world. Ports in Kandla, Mumbai, JNPT (Jawaharlal Nehru Port Trust),Mormugao,Mangalore and Cochin are on the west coast of the country, whereas ports at Kolkata, Paradip,Visakhapatnam,Chennai, Tuticorin and Ennore are on the east. Apparently, the Ennore port is a registered public company in which the government owns 68 percent. And, there is Port Blair in Andaman and Nicobar Islands.
Amongst these thirteen ports, twelve are government ports and one is a corporate port; but all these thirteen ports are the major ports of India as they are under the Union List of the Indian Constitution and therefore, they are administered by the Government of India and are incorporated under The Major Port Authorities Bill of 2020.
This doesn’t mean that there are only thirteen ports in India. There are many minor or private ports in India, regarded as “Non-Major Ports”, stated under the Concurrent List and are governed by their respective State Governments. Private Ports like Mundra, Hazira Dahej and Pipavav are significantly well-developed bringing in more revenue to the country.
The legislative journey of the bill began in the year 2016 in the House of the People (Lok Sabha) when it was introduced by Mr. Pon Radhakrishnan, the Minister of State for Shipping.
When the bill was tabled in 2016 first, defining the major ports, it gave a wider prospective to the operations that were conducted by the Board of the Major Ports. The parliamentary standing committee did come up with various recommendations for the bill that were being taking into consideration. But, unfortunately, the tenure of the House of the People came to an end and so the bill lapsed.
The process was repeated in the year 2020 and the bill was re-introduced in the House of the People on 12th of March, 2020 byMr. Mansukh Mandaviya, the Minister of State for Shipping.
The Major Port Authorities Bill, 2020 aims to provide more functional autonomy and operational independence and flexibility to the port authorities of major ports in India. Operating in a very competitive environment, these major ports need to be empowered to take commercial decisions without being restricted by governmental controls. The bill of 2020 hopes to provide regulation, independent operation, intentional autonomy and organised planning to the major ports in India.
This bill is an attempt to replace the Major Port Trusts Act, 1963.
The Major Port Authorities Board:
As per the old Act, all major ports were controlled by their respective Board of Port Trusts that had members appointed by the Central Government.
The Bill yields for the creation of Major Port Authority Board for each major port in India, replacing the existing Port Trusts.
Structure and Composition of Board:
Under the 1963 Act, the board comprised of 17 to 19 members who were appointed by the Central Government.
As per the 2020 Bill, a linear structure of the Board shall comprise of 11 to 13 members, that is -
1) A Chairperson (appointed by the central government on the recommendation of a selection committee)
2) A deputy Chairperson (appointed by the central government on the recommendation of a selection committee)
3) Two members from the labour union representing the interests of the employees of the Major Port Authority
4) One member from the respective state governments
5) One member from the Railways Ministry
6) One member from the Defence Ministry
7) One member from the Customs Department
8) Two to four independent members
Powers of the Board:
Under the current regime, there are Boards of Trust (BoT) on major ports but these BoTs are functionally dependent on the Central Government to give them directions for contracts or day-to-day operations or while taking many other decisions. The board has limited powers while functioning the port.
While running a massive operation like a Port, such as handling millions of tons of cargo, one must at least have the power to take decisions on their own.
For the development of the major ports, this 2020 Bill permits the Board to use its property, assets and funds as deemed fit.
Rules can also be made by the Board on subjects like –
(i) Declaration on availability of port assets regarding port-related activities and services,
(ii) Development of infrastructure facilities such as setting up new ports, jetties and so on,
(iii) Providing exemption or remission from payment of any charges on any goods or vessels.
Public Private Partnership (PPP):
PPP projects are projects taken up by the Board through a concession contract. The tariff for the initial bidding purposes may be fixed by the board. In such projects, the revenue share will be based on the specific concession agreement.
Fixing of rates:
Established under the 1963 Act, the Tariff Authority for Major Portsfixes the scale of rates for assets and services available at the ports.
Under the Bill, the Board or committees appointed by the Board will determine these ratesfor-
(i) Services that will be performed at ports,
(ii) Access to the port assets and also their usage, and
(iii) Different classes of goods and vessels.
No retrospective effect will be shadowed on the fixing of rates and should be uniform with the provisions given under the Competition Act, 2002 or any other laws in force (subject to certain conditions).
Financial powers of the Board:
The Boards controlling major ports have provided with the facility of raising loans, established under the Act of 1963, only after seeking prior sanction of the Central Government.
But as per the condition on the Bill, in order to meet the capital and working expenditure requirements, the Board may raise loans from any -
1) scheduled bank or financial institution within India, or
2) Any financial institution outside India that is compliant with all the laws.
Yet, the Board will require prior sanction from the Central Government for giving loans above 50 percent of its capital reserves.
Corporate Social Responsibility:
TheBill of 2020 provides that the funds may be used by the Board for providing social benefits that includes development of infrastructure in areas like education, health, housing, and skill development for the benefit of the employees, customers, business partners of the Board and also for the local communities, environment and the society at large.
The Board is also concerned about the labour trust. A representative from the labour union has to be included in the board. Conditions of the current labour employees will be taken into consideration. Pensionary benefits for those who are retired shall be provided under this bill.
Replace of the existing Tariff Authority for Major Ports constituted under the 1963 Act with an Adjudicatory Board has been demanded in the 2020 Bill. This Adjudicatory Board shall be constituted by the Central Government.
Members of this Board shall be -
a) A Presiding Officer
b) Two members
All shall be appointed by the central government.
Functions of the Adjudicatory Board
(i) Take over the residuary function of the authority of major ports.
(ii) Resolving or looking into the disputes that might arise between the port authorities and PPT operators.
(iii) Reviewing stressed PPP projects.
(iv) Also make suggestions while reviewing the projects.
(v) Carry out certain functions of the Tariff Authority for Major Ports.
(vi) Adjudicating on claims related to rights and obligations.
Under the previous Act, there are innumerable penalties for disregarding the provisions of the Act. Such as –
(i) Penalty up to Rs 10,000 - for setting up any structures on the harbours without permission, and
(ii) Penalty up to 10 times the rates - for evading rates may extend.
But underSection 62of the Major Port Authorities Bill, 2020,
“Any person who contravenes any of the provisions of this Act or any rule, regulation or order made there under, shall be punishable with fine which may extend to one lakh rupees.”
As mentioned earlier, the Indian ports work in a very competitive environment. Different ports perform have different but countless levels of efficiency. With the growth in the ship industry, there are various types of ships that are created on the basis of size, purpose, type of cargo, et cetera. The landscape of shipping has completely transformed in the past last 50 years but the infrastructure of ports is not as developed as they should have been.
With the implication of this bill, the day-to-day running of port operations and activities, such as getting cargo on and off the ships, running of the ships, providing them with power is left to private entities or individuals who have specialised in their aspect. This bill will help to balance the regulations and give a fair chance to all. While the port authorities shall be the regulator of the serious business, day-to-day operations will be handled by people who are equipped or specialised to do the particular job.
Port efficiency or port productivity can be measured in various ways such as cargo output or production function and so on. These activities are broadly divided into three categories: operational indicators, factor productivity indicators, andeconomic and financial indicators.
With the developing world, the major ports of India under the control of the Central Government have been unable to compete with 200 odd minor ports and the private ports of India. Mundra port in Gujarat, one of the largest private ports, and Pipavav port in Gujarat, the first private port, stood third and fourth in their performances while handling the cargo traffic whereas the major ports of India came much down below.In 2017, minor ports developed at the rate of 16 percent while the major ports developed at the rate of 3 percent.
With such less numbers in the past, this Bill is like “the knight in the shining armour” that shall help uplift the development of the major ports.
Is The Bill Creating A Back-Door Entry For Privatization?
Development of a standardised measure of different major ports through which assessing them should become convenient is very essential.
The concept of the 2020 Bill has been believed to be an adopted strategy of the Singapore model of port corporatisation. After converting the Singapore harbour board into a port authority, through a Parliamentary Act, it was later converted into a commercial entity. Today, PSA International Pte Ltd is known to be the world’s top container port operator. The strategy is to convert the ports into companiesand potentially disinvest or privatise them. Corporatisation shall be of help to receive dividends from these ports. But, again, this is just an assumption of a few.
In India, the comparison of the major ports is with none other than the non-major or private ports. The standards of development need to be lifted in order to walk together with the changing world. Vital measures have to be taken to create uniformity amongst performance of different ports for makingperformance comparable.
In the 1963 Act, there were thirty-four subjects in which Government approval was required but in the new act, the number of subjects have been brought down to eight.
Privatization or not, in broader sense, this 2020 bill is a revolutionary change or shift that shall increase the revenue of the nation and serve the people of the nation by fulfilling their needs, through the means of export-import trade is the main objective of the Indian Ports.
One must not forget that the journey of this bill started much before the bill was presented to the House of the People.
The Major Port Authorities Bill, 2020, provides more stable and concrete operations as compared to the old Act. Though there are concerns whether the mentioned conditions shall be effectively implemented, the major part of the act senses positivity in terms of growth, development and progress of the port authorities, shipping industry and the Nation.
v The Major Port Authorities Bill, 2020 Bare Act, http://188.8.131.52/BillsTexts/LSBillTexts/Asintroduced/78%20_2020_LS_ENGLISH.pdf
v Major Port Authorities Bill_15-June (Apr 12, 2019), https://www.youtube.com/watch?v=_fNMdG38rG0
v Manoj P, Move to landlord port model means privatizing state-run cargo berths, LIVEMINT (Sept.02 2016, 01:12 AM IST) https://www.livemint.com/Industry/TrIxBCGekevmqGS8dbGo0I/Move-to-landlord-port-model-means-privatizing-staterun-carg.html
v Soma Roy Chowdhury& Jhumoor Biswas, Performance Analysis of Major Ports in India, Vol. 17, No. 3, 2016
v Manoj P, Major Port Authorities Bill: Stage set for corporatisation of major ports, THE HINDU BUSINESS LINE (Mar. 13, 2020), https://www.thehindubusinessline.com/economy/logistics/major-port-authorities-bill-stage-set-for-corporatisation-of-major-ports/article31059430.ece
v ET, Bureau Cabinet approves Major Port Authorities Bill, 2016, (Dec. 15, 2016, 01:11 AM IST) https://economictimes.indiatimes.com/news/economy/policy/cabinet-approves-major-port-authorities-bill-2