In an interview with FE?s Praveen Kumar Singh and

KG Narendranath, shipping secretary K Mohandas said non-major ports will add more capacities in the next 10 years than major ports. Private sector will dominate the investment scenario, he says.

The maritime agenda for next 10 years envisages investment of nearly Rs 3 lakh crore in port sector. What all will be the sources of funding?

We are aiming at adding 2,300 million tonnes (MT) to India’s existing capacity of 1,000 MT by 2020, and most of these additional facility would come up at non-major ports. This, we believe, is a realistic target. Investments of Rs 2.87 lakh crore will be required to create this additional capacity, bulk of which will come from private sector through the public-private partnership route. There is also the need for foreign direct investment and so, the projects will be awarded through global tenders. There is no real concern or worry about availability of resources because the private sector will naturally be interested in commercially viable projects.

You have planned the setting up of a special body for funding the port projects.

The maritime agenda is for the next 10 years. It is not that we are going to take decisions on each item of the agenda in the near future. As and when it is felt that there is a need for creation of a maritime finance agency, it will be taken up. As of today, we are not looking at that proposal (special body), but at the same time we could look at methods of utilising the surplus resources with major ports. We have to assess the excess funds with the major ports.

With non-major ports (ports that are outside the Major Port Trust Act) slated to add large capacities in the next 10 years, do you feel the need for a change in regulations?

We have requested all coastal states to create maritime boards, which will, in turn, set guidelines for development and operation of ports. Gujarat, Maharashtra and Tamil Nadu have maritime boards and Kerala, Andhra Pradesh and Orissa are in the process of legislating for setting up such entities. Even without such boards, states have been working on port development. I want to make one thing clear ? we don?t propose to regulate port development. (Tariffs of major parts are regulated by TAMP). Last year, we had come out with a policy to prevent private sector monopoly in the development of major ports. The only restriction that was brought in was that a company operating a terminal for a particular commodity cannot be awarded another terminal for the same commodity at the same port. There was a proposal in the draft policy to prevent a private firm from developing more than one terminals within a radius of 100 km for a particular commodity. This was found too restrictive and was removed.

What is the state of investment in the port sector?

Investments in the sector are gathering pace. There was some sluggishness in investments owing to the delay in finalising the model concession document to award PPP projects. The MCA was finalised in 2009. Since then, various projects have been awarded and investments are afoot. Eight PPP projects have been awarded so far.

Is the ministry confident that it will meet the target of awarding 21 projects this year?

We will award several more projects this fiscal, although it is not sure if all 21 will be awarded before the end of the fiscal. There are court cases regarding two projects ? one at JNPT and another at Tuticorin port. Some projects require restructuring because of change in the nature of terminals and traffic estimates.

What will be level of actual investments in the port sector during 11th plan? Have you set any targets for the 12th Plan?

We still have to look at the 12th Plan. As far as 11th plan is concerned, for the current year, we have planned Rs 14,000 crore investment in PPP projects at major ports alone. It does not involve the amount spent in dredging, connectivity and warehousing, projects in which ports themselves invest.

How much plan outlay has shipping ministry demanded?

We have demanded around Rs 1,000 crore. The allocation for 2010-11 was Rs 630 crore.

Budget is nigh. What are the things that the shipping ministry is looking forward to?

We are not heavily dependent on government budget. But the shipping industry has been demanding several tax concessions like reform of tonnage tax regime. (Tonnage tax is a global practice for the shipping industry and is distinct from the tax on profit, as it is applied tonnage which is considered to be a proxy for the shipping company?s income).

They say that several provision of tonnage tax system are not in consonance with the global best practices. The industry has also said that Indian seafarers on foreign-going Indian flagged vessels should not be subject to personal income tax, because there is a dearth of seafarers for Indian vessels. These professionals prefer to work for shipping lines where they are not required to pay taxes. Shipping ministry has supported these demands of the industry.

What is the new rate of shipbuilding subsidy suggested by shipping ministry?

The shipbuilding subsidy was withdrawn with effect from August 2007. At that time, the rate of subsidy was 30%. Now we have proposed a subsidy between 12-16%. The matter is pending before the finance ministry.

When will the ministry come out the draft of the proposed integrated port law?

The regulatory part of the the proposed legislation is getting finalised. The idea is to merge the Indian Ports Act and Major Ports Act. The draft will come up for public discussion this month, hopefully. After taking public comments, we would finalise the draft and put up a cabinet note.

The ministry has set a target for the Indian shipbuilding industry to capture 5% global market by 2017. What is the strategy through which this objective would be fulfilled?

Shipbuilding subsidy is one incentive that would enable Indian firms to compete globally. We are also looking at the possibility of Indian shipyards getting more Indian orders. They are getting domestic orders but more of such orders should come forth so that we can increase our share of the global shipbuilding market to 5%.

Are global orders coming?

Yes, but the proportion of these in their overall order books is very small. I was reading a report that in January, 70% of global orders have gone to Chinese companies.