Major Port Authority Bill, 2020

Why in News?

The Union Cabinet has cleared the Major Port Authority Bill, 2020 and it is expected to breathe new life into government-owned major ports.

What is the government trying to do?

• The Union government’s Sagarmala project (2015) was aimed at modernising major port infrastructure.
• Having invested in port infrastructure, the Cabinet has taken the next critical step to enable ports to control that new infrastructure - operating policy reform.
• So, it approved the Major Ports Authority Bill, 2020 to comprehensively overhaul the governance structure of major ports.
• This Bill seeks to replace a 1963 Act and it will be sunset time for the Tariff Authority for Major Ports (TAMP).

Why such regulation is needed?

• Indian state-owned ports or major ports (12 in number) account for around 55% of maritime cargo traffic in the country.
• But, they still have to adhere to a tariff and policy regime that has its roots in the 1960s.

• The TAMP is the central authority that sets tariffs for the ports.
• It also holds the master key for many other operational and commercial matters. This is just a lot for it to deal.
• As a consequence, a substantial chunk of trade has shifted to the “non-major” or “private” ports.

What are the benefits of shifting to private ports?

• These ports operate under a much more liberal regime and are under the control of state governments.
• They are operationally more efficient and are crucially developed better linkages to the hinterland to enable smooth traffic flows.
• Currently, the private sector is involved in major ports in areas like cargo handling.
• Much more is needed by way of investment in areas such as dredging and adding new terminals.
• [Dredging - Done to increase the depth of the port to accommodate larger ships.]

What is the 2016 version?

• The latest Bill approved by the Cabinet is expected to be along the lines similar to the 2016 version of the Bill.
• The 2016 Bill granted major ports greater autonomy, including the ability to set tariffs on their own.
• It also enabled the board of an individual port to raise funds from banks and financial institutions without taking the permission of the central government.
• It provided for the setting up of a centralised adjudication board to resolve disputes in PPP projects between the port and private sector concessionaires.

What is the importance of the Bill?

• These measures could lead to major ports becoming more attractive to the private sector, both in terms of investment and as service providers.
• These reforms are critical if the investments made in the last few years are to pay off.
• The recent measures like the Sagarmala project, developing port-based SEZs, etc., gave a boost to the shipping sector.
• With the approval of the Port Authority Bill by the Parliament, a critical missing link will finally be in place.

Source: Business Standard