FE Editrorial : Please leave ‘minor’ ports alone

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The Financial Express: Aug 19 2009, 22:31 IST

Minor ports have hitherto been beyond the Centre’s purview. As the shipping ministry revisions this situation, we have cause for concern. Back in 1950, the Constitution made a distinction between major and minor ports, with the idea that the former would be principal gateways for international trade and hence under central jurisdiction, while the latter would be suitable for fishing and the like and so remain under state charge. This differentiation was without significant impact till liberalisation, when the government allowed private enterprise into the sector. Then, given that the Constitution didn’t define ports by size, go-getting state governments like that of Gujarat made sure that their ports really took off on the back of private enterprise. Nothing epitomises this triumph better than that so-called minor ports have now become some of the biggest ones in the country. In 2004-05, Vishakapatnam’s long reign (berthed in AP) as India’s biggest port was interrupted by Gujarat’s minor port of Sikka becoming the top port. Next fiscal, the state saw its minor ports handling 123.6 million tonnes of cargo compared to the 53 million tonne handled by its only major port at Kandla. In the 11th Plan, private enterprise is expected to deliver three-fourths of the total projected investment in the ports sector.

On the face of it, recommendations submitted in the first week of August by the committee headed by Vijay Chhibber, ministry of shipping, look liberal. For instance, on standardising port operations, the committee suggests delegating power for greater flexibility, clarity and operational freedom in the managements of major ports. The problem is that the Centre doesn’t have too great a record on implementing policy in a consistent way. To take one example, the Centre gave security clearance to a consortium that includes a Chinese port operator to bid for terminals at Paradip Port in Orissa but denied permission to another group that includes a Hong Kong (now a part of China) company. Also, let’s consider why captive ports (like the one belonging to RIL in Gujarat) are not pressing on the liberalisation argument to convert to general use, whereby they could charge other companies to use their facilities. What they fear is that such a step would bring a bunchload of bureaucrats and customs inspectors riding their operations. Finally, when ports and developers are outside the ambit of a central regulator, they have operational flexibility as well as freedom in fixing tariffs. When choosing between Kandla (major port) and Mundra (minor port), why did Maruti Suzuki decide on the latter? Because with the latter, it could rely on timely infrastructure upgrades and negotiate on prices at a market-updated level. Bottomline: if the minor ports look like they are taking good care of themselves without government intervention, why must the Centre interfere anyway?

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