Tariffs for major ports to be freed

India’s major ports would be soon able to fix its own tariff and compete on a level field with the other ‘non-major’ ports in India.

The shipping ministry plans to set-up a new port regulatory body, and cease the operations of Tariff Authority for Major Ports (TAMP) and allow all ports — both minor and major — to fix their own tariffs.

While, discussions on this has been on for a long time, it is believed that the shipping ministry is in the final stages to present the new policy for further approvals.

“It will be a new body for the ports in India and it will have new functions. It will not be involved in tariff fixation. Its role would be to only provide certain guidelines and advice. It would also help monitor performance standards of the ports across the country,” said K Mohandas, secretary, ministry of shipping.

As to when the new body will be formed, he said it would be difficult to give an exact timeframe. “But the final draft would be ready by the end of March.”

India’s twelve major ports have suffered for long because they couldn’t fix their tariffs. The disadvantage has increased in the past decade with new non-major ports coming up across India’s coastline.

Tariffs for all operations and services at the twelve major ports in India are fixed by TAMP.   

More specifically, it sets the upper ceiling on charges that can be levied.

“Once the new body is formed, TAMP will cease to exist,” Mohandas said.

With the new policy, major ports will be able to demand a reasonable tariff depending on the location and service advantages offered to shippers, literally making it a free market — the best port services will command the best price.

“We welcome the decision. At present, we suffer a distinct disadvantage in terms of tariffs. This move would help and we have worked really hard in convincing the government,” said Rahul Asthana, chairman, Mumbai Port Trust.

Owing to dissatisfaction with the existing TAMP authority, a couple of cases have also been filed against the regulatory body. Most of these cases have been filed by private players who operate a terminal or other infrastructure services at these twelve major ports.

It would be interesting to see what happens to these cases once TAMP ceases to exist. “TAMP was formed under an Act. Hence, for the body to cease to exist, a number of legal procedures need to be followed. The cases will be dealt with based on what the procedures would be,” said Mohandas.

The other side of the story is, private ports would also be at an advantage in other commercial operations.

“Other than tariffs fixation, all other commercial operation decisions will need to be taken in the similar way as any public sector company in India is expected to take,” said Mohandas.
“Customers will benefit due to tariff competitiveness. Once the ports are corporatised, they would help add to competition in terms of commercial operations and also help increase India’s port capacity and turnaround times,” said Vishal Kalantri, director, Dighi Port Ltd.

On the plan to corporatise certain major ports, Mohandas added, “That policy is through and its just a matter of implementation now.”