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American Shipper

Former JNPT chairman calls for centralized control

Former JNPT chairman calls for centralized control

A former chairman of the Jawaharlal Nehru Port Trust wrote in an editorial Monday that the way for India’s port sector to attract foreign investment and expand capacity is to decentralize decision-making away from New Delhi.

   Jose Paul, former JNPT chairman and now a professor at Manipal University, wrote in Exim India that China’s rapid ascent to the top of the ports sector can be largely attributed to the way the central government there allowed development to occur on a provincial level.

   Of the world’s 30 largest container ports, nine are in China and only one is India — JNPT is the 24th largest.

   “One of the most important lessons that can be learned from China is the ability to decentralize policymaking,” Paul wrote. “This by itself would have a far-reaching effect. The institutional changes in (China’s) Ministry of Communication and transferring port management to local municipal authorities had a tremendous impact on the development and modernization of China's ports. It created a competitive spirit among the ports of various provinces. In India, we find a more centralized system whereby policymaking, governance and regulatory functions in the ports sector are largely concentrated at the central level, i.e. major ports are under central control, and only the non-major ports are controlled by the respective maritime state governments.”

   There are 12 major ports in India under the direct jurisdiction of the country’s shipping ministry, though there are dozens of so-called “non-major ports” that have been developed by private investors under the jurisdiction of state governments.

   “Comparative research from China and Malaysia has shown that decentralization of policy-making and giving greater decision-making authority to maritime state governments is crucial in accelerating the investment decisions of foreign investors,” Paul wrote. “Even though development of non-major ports in India falls under the constitutional jurisdiction of maritime state governments, any foreign investment under the public-private partnership model would need security clearance by the central government.”

   Paul said the potential of India’s ports sector relies largely on how much power the government in New Delhi is willing to cede to state governments. That would streamline approval processes and make the sector much more attractive to private investors who, until now, have had to wade through layers of bureaucracy that add years of planning for any project.

   “The future of port development in India unmistakably rests on the degree and extent of private sector involvement and participation,” he said. “For such investment and participation to become meaningful and rewarding, the port services market has to be further liberalized, government policy initiatives have to be further broadened, regulatory controls have to be further refined and an overall thrust and political commitment exhibited to enhance the confidence of private investors in order to attract much-needed capital for port development in India.”

   The success of some of the privately backed, non-major ports should provide a road map to the future, he insists.

   “The real growth story of Indian ports does not seem to lie in the existing major ports, but in the non-major ports,” he wrote. “Due to a number of constraints in the urban environment, paucity of land and pollution issues, future development of ports is more likely in the non-major ports. The pace of development and growth of traffic at non-major ports in India has been impressive.”