About the draft Indian Ports Bill of 2022: An improved Bill, but still contentious

Source: The post is based on the article “An improved Bill, but still contentious” published in The Hindu on 14^th September 2022.

Syllabus: GS 3 – Infrastructure – Ports.

Relevance: About the draft Indian Ports Bill of 2022.

News: The draft Indian Ports Bill of 2022 will replace the Indian Ports Act of 1908.

What is the performance of Indian major and non-major 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.

Data show that non-major ports have fared much better than major ports. 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. 

Major ports performed various port functions with their own staff and equipment. States developed non-major ports almost entirely on a public-private partnership (PPP) basis. For instance, Gujarat developed India’s first private port, largest captive port, largest commercial multipurpose port, etc.

Maritime State Development Council (MSDC): It serves as an apex advisory body for the coordinated development of major ports and non-major ports. It has met only 18 times in the last 25 years.

What are the issues associated with the draft Indian Ports Bill of 2021?

A few major provisions of the draft Indian Ports Bill of 2021 are, the bill a) Give statutory status along with wide-ranging powers and functions to the MSDC, b) Make MSDC a permanent body with its own office, staff, accounts and audit, c) Empower the MSDC to formulate a national plan, to be notified in the official gazette, for the development of major and non-major ports, d) Order an appropriate inquiry if any port contravenes the national plan, and e) Empowered the Centre to make a port non-operational if it was not in consonance with the national plan.

The maritime States oppose the 2021 bill as they thought 1) A statutory-cum-permanent MSDC will curtail their powers to develop and manage non-major ports, 2) The bill reflects Socialist-era issues of Central planning and Inspector Raj.

What are the changes in the draft Indian Ports Bill of 2022?

The Bill dropped or toned down many of the 2021 bill provisions. However, the Bill a) Retained the MSDC as a statutory-cum-permanent body, b) Authorise the Central government to entrust any administrative and financial functions to the MSDC.

What are the challenges with the draft Indian Ports Bill of 2022?

Does not resolve the main issue of disagreement between the Centre and the maritime States: A statutory-cum-permanent MSDC will make the better performing non-major port struggle with the issues of major ports. It will choke future development of non-major ports and stifle novel initiatives by the maritime States.

Ensure that the composition of the MSDC is in favour of the Centre: The Bill makes five Secretaries and one Joint Secretary to the Government of India, besides the administrators of the coastal UTs, as members. Further, the vote of an officer is also counted the same as the vote of a Minister.

What should be done to make the draft Indian Ports Bill of 2022 holistic?

1) Like the Goods and Services Tax Council, the MSDC should consist only of the concerned Ministers of the Union and maritime States/UTs; officers should only be special invitees.

2) Ports in Germany, the US and China are managed at the municipal and regional levels. A 2011 World Bank Report, ‘Regulation of the Indian Port Sector’, observed that non-major ports are perceived as “more business-oriented, customer friendly, cheaper and in general more efficient.”

So the Centre should understand that the ports are best managed by local and regional governments.

3) The draft Bill relating to the MSDC must be scrapped and the MSDC should remain an apex advisory body.

Overall the centre should work towards greater decentralisation, deregulation, corporatisation and private sector participation.