State-run major ports free to set own tariffs

State-run major ports free to set own tariffs

Mumbai: Each of the 12 Indian government-owned major port trusts have been granted the flexibility to set rates based on market forces, according to a new tariff policy approved by the Shipping Ministry.

All these years, the major ports were restricted in setting port and vessel related charges by the Tariff Authority for Major Ports (TAMP), and were always a step behind privately run ports which used market demand and supply parameters as their criteria for setting rates.

The flexibility, however, comes with an onerous responsibility on the chief executives of these ports – they will have to ensure that the flexibility to set rates does not lead to a “loss of traffic”, i.e. diversion of cargo to a nearby port due to higher rates.

Meanwhile, the Shipping Ministry said it is working on a plan to revive several of the country’s 133 non-functional ports, as part of a move to encourage traders to use India’s vast 7,500 km coastline for transporting local freight. It would be part of Prime Minister Narendra Modi’s ambitious Sagarmala project.

The ministry expects to hire a state consultancy to study the scope of coastal shipping in India and ways to promote it. A concept note has been prepared for forming special purpose vehicles by state-run Shipping Corp of India (SCI) and Dredging Corp of India (DCI) with state governments and private operators, to be run on revenue-sharing basis.

Most of the ports have poor draughts, and face dredging issues or lack terminal facilities. DCI would undertake dredging operations at the ports, while SCI would berth three of its coastal container vessels, each of 1,869 teu capacity at the identified port to act as a catalyst for other coastal vessels to visit the port.

Shirish Nadkarni

Shirish Nadkarni is a management consultant and freelance international journalist, who has been writing on all spheres of Indian business for the past three decades for a number of reputed overseas publications. An avid sportsman, Nadkarni has represented India in international veterans' badminton since 1997, and was the 55+ age group doubles world champion in 2005.

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