Arun Jaitley for corporatising major ports

Sisir Pradhan| The Dollar Business For a long time now, India's major ports have been reeling under infrastructure bottlenecks, leading to massive delays in cargo movement, which have seen them losing out to non-major ports. But what can be termed as a silver lining, Finance Minister Arun Jaitley has promised to encourage “ports in public sector to corporatise, and become companies under the Companies Act”. But this, given that the port sector is probably the last fortress of trade unionism in India, is easier said than done. Maybe, that’s why Jaitley stopped short of a full-fledged announcement and used the term ‘encouraged’. Challenges Galore While this is a necessary first step to help India's major-ports reach global standards, the government needs to work on areas like acquisition and creation of land banks to allow faster development of port-based industries; development of industrial zones near ports to improve manufacturing efficiency; deepening of navigational channels to serve large vessels; mechanisation and automation to add capacity and improve efficiency; building supporting infrastructure and connectivity (road, rail and air); restrict interference and influence of trade unions, local stevedores and cargo handling agents; and liberalisation of the financing norms for port projects. What also needs to be seen is how Ministry of Shipping, Ministry of Finance and Ministry of Environment coordinate to work towards making this possible. Another Ennore? While making the announcement, Jaitley said, “As the success of minor ports has shown, ports can be an attractive investment possibility for the private sector. Ports in the public sector need to both attract such investment as well as leverage the huge land resources lying unused with them.” Though the decision to corporatise ports might look like a way forward, it is to be seen how seriously the initiatives are executed and how much freedom the ports get post corporatisation. Reacting to the announcement, Indian Private Ports & Terminals Association Secretary General S. S. Kulkarni told The Dollar Business, “This is a welcome move. However, how much decision making freedom will be given to the port corporations needs to be seen. It should not be similar to Ennore Port corporatisation. Timely decision on many small issues by port trusts will immensely benefit BOT (build-operate-transfer) operators at major ports. Ennore Port is still depending on Ministry of Shipping decisions. This is the biggest hurdle today.” It’s worth noting that of the 12 major ports in India, Ennore Port is the only corporate port, and was corporatised in 2001.  

This article was published on February 28, 2015.