In a recent meeting, officials of the various port trusts and state maritime boards instead favoured setting up of port infrastructure fund. Their recommendation was accepted by the council.

The officials rejected the proposal on the grounds that a number of financial institutions for infrastructure sector, like Infrastructure Development Finance Corporation (IDFC) and Industrial Credit and Investment Corporation of India (ICICI) already existed.

They cited the example of Shipping Credit and Investment Corporation of India (SCICI) which could not be successful and was finally merged with ICICI.

RITES had suggested that the equity of the proposed finance corporation be held by the government and the 12 majorport trusts.

On sources of funding, RITES recommended part of the surpluses of ports and of funds raised through cess on cargo be parked in the finance corporation.The maritime council, however, accepted the recommendation of senior officials for diverting the money from the proposed cess to the port infrastructure fund.

RITES report said that these funds should be leveraged on the lines of financial institutions so that a corpus could be created for development projects within major ports and also those ports which come under the purview of state maritime boards.

The money could be utilised for expanding all major ports and construction of greenfield ports in states.

RITES favoured such a method of funding in order to meet the massive capital requirement for developing harbour, construction of breakwaters and dredging. Private sector participation has not been enthusiastic in these areas.

Expansion projects are taken up by major ports either through internal resources, BOT route or through lendingfrom multilateral institutions with sovereign guarantees.

Though major ports are allowed to raise funds through inter-port loans, they cannot leverage funds from financial markets or directly access financial markets.

During the recent meeting, senior port officials criticised RITES study for ignoring the issue of linkages in its report. They noted the lack of infrastructure such as rail-road linkages as a severe bottleneck to development of ports and their efficient operations.