An improved Bill, but still contentious

An improved Bill, but still contentious

#GS-03 Economy

For Mains

The Current situation of Indian Ports

  • India has 12 major ports and 212 non-major ports.
  • Most of the non-major ports are small fishing harbours and only a few of them cater to international shipping.
  • Major ports figure in the Union List and come under the jurisdiction of the Central government.
  • Non-major ports are in the Concurrent List and come under the respective State governments, but the Centre has overriding legislative and executive powers.
  • While major ports performed the various port functions with their own staff and equipment as a public sector enterprise, maritime States developed non-major ports almost entirely on a public-private partnership (PPP) basis.

The concerns with 2021 draft Bill:

  • The Indian Ports Act of 1908 is obsolete in many respects and needs a complete overhaul.
  • The 2021 draft of the Indian Ports Bill sought to give statutory status along with wide-ranging powers and functions to the MSDC and make it a permanent body with its own office, staff, accounts and audit.
  • It sought to empower the MSDC to create a national plan, to be notified in the official gazette, and for the development of major and non-major ports; monitor the development of non-major ports and ensure their integrated development with major ports and the national plan; and to order an appropriate inquiry if any port do not comply with the national plan.
  • It also empowered the Centre to make a port non-operational if it was not in consonance with the national plan.
  • It prescribed harsh penalties including imprisonment for non-compliance with the MSDC’s directions by port authorities, port officials and other persons.
  • This was considered controversial since, while, a body like the MSDC is necessary, but neither the nature nor the quantum of its work call for either statutory status or a permanent body.
  • This caused the Maritime states to fear that the real aim of a statutory-cum-permanent MSDC is to curtail their powers to develop and manage non-major ports.

About Maritime State Development Council (MSDC)

  • Maritime State Development Council (MSDC) was created in 1997 by an executive order, with the Union Minister of Shipping as chairperson and the Ministers in charge of ports of the maritime States/Union Territories (UTs) as members.
  • The Union Ministry of Shipping provides secretarial services for the MSDC’s meetings.
  • The MSDC was expected to serve as an apex advisory body for the coordinated development of major ports and non-major ports.
  • However, it has met only 18 times in the last 25 years.

What has changed in the 2022 draft?

  • The 2022 draft Bill has dropped or toned down many of these provisions, but it has retained the MSDC as a statutory-cum-permanent body.
  • It has also retained provisions like Section 10(c) that authorise the Central government to entrust any administrative and financial functions to the MSDC which can be interpreted in a number of ways.
  • The draft Bill makes five Secretaries and one Joint Secretary to the Government of India, besides the administrators of the coastal UTs, as members which makes a bad precedent since the vote of an officer would count the same as the vote of a Minister.


What could have been done?

  • 50% weightage to the votes of the Ministers representing the Centre and 50% weightage to the votes of Ministers representing the maritime States/UTs in proportion to the number of functioning non-major ports and officers should only be special invitees.
  • International experience shows that ports are best managed by local and regional governments hence, more powers should be given to the local bodies in the region of the port.
  • This is substantiated by data since between 1993-94 and 2021-22, the share of the total cargo of non-major ports went up from 8% to 45%, and the CAGR of cargo traffic of non-major ports was 14% compared to the 4.8% of major ports.
  • A 2011 World Bank Report, ‘Regulation of the Indian Port Sector’, observed that non-major ports are seen as “more business oriented, customer friendly, cheaper and in general more efficient” whereas “unnecessary regulatory and financial burdens are imposed upon Port Trusts, private terminal operators and investors” by the Central government.
  • Hence, we should be giving them more autonomy rather than increasing bureaucratic burden.