A pathway to transform India’s ports

To fully unlock India's port potential, it is crucial to move beyond policy-formulation and delve deeper into port transformation.

By Veni Mathur 

India’s trade has witnessed significant growth with key corridors such as India-Africa, India-UAE, and India-China registering substantial increase. For instance, the trade corridor between India and Africa has seen a spurt in trade volumes, growing 12 percent annually over the past five years. Similarly, trade with the UAE and China has shown consistent growth, contributing significantly to India's economic expansion.

While progress has been made in recent decades, a more comprehensive overhaul is required to propel India's port sector to the forefront of global competitiveness.

Recognizing this imperative, the Indian government has demonstrably embarked on a regulatory evolution through the Model Concession Agreement (MCA), the Maritime Amrit Kaal Vision 2047, and Sagarmala which initiatives hold significant promise for the future of Indian ports.

However, to fully unlock India's port potential, it is crucial to move beyond policy-formulation and delve deeper into port transformation. This necessitates seamless integration of global best practices into the Indian context. Here, collaboration between central and state governments becomes paramount. By preparing comprehensive port policies that are regionally relevant yet aligned with national goals, India can truly propel its port sector to the forefront of global competitiveness.

Tweak concessions to promote stability

One area that demands immediate attention is the concession duration. With several major port concessions nearing their end, such as the Pipavav Port and Karaikal Port in 2028, a comprehensive evaluation of the growing needs of the country is warranted. Concession periods must be aligned with the long-term vision for the sector, enabling sustainable investments and operational efficiency.

Globally, ports have started granting longer concession tenures and have successfully implemented provisions that allow for the co-terminus extension of sub-concession tenures to match the primary concession period. This approach keeps the same terminal operators in place, fostering long-term business continuity and operational stability within the ports.

Here, India can draw inspiration from global best practices implemented in The Port of Singapore, Brazil, South Africa, the UK and the US. Singapore's port operations are primarily led by the Port of Singapore Authority (PSA Corporation Ltd), which has extended sub-concession tenures to align with the primary concession periods. Data from the Maritime and Port Authority of Singapore shows that the port's container throughput grew from 33.6 million TEUs in 2018 to over 37.2 million TEUs in 2021. This growth is attributed to improved operational coordination and investments stemming from tenure security. With the alignment of tenures between the primary concessionaire and terminal operators, the Port of Santos has reported a 25 percent improvement in cargo handling speeds.

The Port of Durban in South Africa reported a 10 percent increase in overall efficiency with quicker turnaround times and reduced congestion after extending tenures for operators. The Port of Rotterdam offers a compelling model, granting long-term leases with the inherent option of extending sub-concessions aligned with the primary concession. This approach not only incentivizes performance but also provides a stable and conducive environment for private players to thrive.

Ports in Rio de Janeiro, Los Angeles, New York, Singapore and Santos have successfully implemented performance-based sub-concession extension policies, fostering a culture of continuous improvement and accountability.

The Port of New York, New Jersey, and Los Angeles employ a performance-based approach, focusing on a range of operational and environmental KPIs. The implementation of environmental KPIs in the Port of Los Angeles resulted in a 30 percent reduction in emissions from port operations. The Port of New York and New Jersey, focusing on a range of operational criteria, led to an increase in container handling speed and container throughput.

Pricing needs to be benchmarked to global standards

Furthermore, it is crucial to benchmark India's ports against global standards in areas such as port charges and average drafts. Many leading international ports have implemented competitive pricing strategies and maintained deeper drafts to accommodate larger vessels, enhancing their competitiveness and attracting more trade. India should aim to adopt similar best practices to position its ports as attractive destinations for global maritime trade.

As India aims to transcend the "trailer stage" and unlock its true economic potential; adopting global best practices in the port sector becomes imperative. However, this process should not be a mere copy-and-paste exercise; instead, it should be a thoughtful adaptation tailored to the local market conditions.

The comprehensive legal framework employed by the UK, the performance-based extension provisions in Singapore and the US, and the proactive strategies of authorities in the Netherlands and Australia in rolling out the red carpet for private investment in the port sector are all examples worth considering as the new government in India seeks to propel the economic growth story to new heights. Additionally, learning from successful global examples, India should consider adopting policies such as the co-terminus extension for terminal operators along with the primary concessionaire.

By embracing these global best practices and integrating them into the Indian context, the port sector can undergo a transformative journey as it has set its sight on ambitious maritime expansion with plans to develop six mega ports by 2047 with capacity exceeding 300 MTPA at Vadhavan, Tuna Tekra, Chennai, Cochin, Paradip and other non-major port clusters which will significantly boost its cargo handling capacity.

A reformed and revitalized port sector will not only contribute to India's economic growth but also position the country as a formidable player in the global trade landscape. Like the Logistics Policy, where the central government led the way; creating guidelines and states subsequently developing their own aligned versions, India needs to follow the same pattern as far the maritime policies are concerned.  This will ensure a cohesive and efficient ecosystem, facilitating seamless operations and attracting investments across the country.

(Veni Mathur is Vice-Chairperson, Chartered Institute of Logistics&Transport.)

Views are personal and do not represent the stand of this publication.