India port regulation caught in two minds

A bill to change the way tariffs are set at 11 state-owned ports is progressing, while another aiming to overhaul the entire operational structure of Indian ports is languishing.    The operations of India’s state-owned ports are currently in limbo based on the status of two government bills seeking to revamp the way 11 containerized cargo gateways across the country are run.
   One bill, which sought to turn the 11 ports into corporate entities rather than public trusts, was dropped, according to reports in late May from the Indian business journal Live Mint.
   Simultaneously, however, another bill that would overhaul the way tariffs are set at India’s largest ports is progressing. The bill would eliminate the Tariff Authority for Major Ports (TAMP), a government agency that regulates what terminals can charge ocean carriers and also sets royalty payments due to the government based on volume.
   TAMP was established in 1997 as a way to ensure that tariffs at India’s state-run ports were set on a level playing field with emerging private terminals. But TAMP is seen as a restrictive force, and one that is pushing containerized cargo away from India’s state-run ports to the now well-established private ports.
   The 11 ports that come within TAMP’s jurisdiction include Chennai, Cochin, Jawaharlal Nehru port, Kandla, Kolkata, Mumbai, New Mangalore, Mormugao, Paradip, V.O.Chidambaranar and Visakhapatnam.
   Most of the terminals at India’s key state-owned ports are privately operated in a landlord setup similar to those in North America. But the restrictive tariff structure has scared off global marine terminal operators from investing more heavily in India despite its promise as a growing source of containerized exports.
   Reports in recent months have quantified the extent to which India’s state-owned ports have lost market share over the last decade to private ports because of the private ports’ more flexible and market-driven rate setting. That, however, ignores the fact that the private ports have acted as a complement to the over-utilized state-owned ports, which largely operate past their cargo volume design capacity.
   Whatever becomes of the regulatory changes on tariffs, the ports appear likely to remain as public trust rather than companies. That bill, first proposed in 2000 and re-introduced at the behest of the current prime minister Narendra Modi’s administration, is intended to allow ports to raise capital outside of the funds allotted by the government.