Explained: The Two New Port Bills That Have Rattled the Coastal States

The Major Ports Authority Act, 2021, and the Draft Indian Ports Bill, 2021, have met resistance from coastal states.

Two maritime Bills recently advanced by the Union government have invited resistance from a number of coastal states.

The Major Port Authorities Bill, 2020, which became an Act after it was passed by the Parliament in February this year, seeks to transform the management model of the major ports in the country. The Bill has kindled speculation of the privatisation of ports.

The Draft Indian Ports Bill 2021, on the other hand, seeks to centralise the governance of the minor ports, which were so far being directed by the state governments.

What are the new Bills/Act? Why have they been introduced? What objections have been raised against them?

Here's all you need to know about the matter.

What Are Major and Minor Ports?

Ports in India are classified as major ports or minor ports. While the major ports fall under the jurisdiction of the central government, the minor ports are owned and managed by state governments.

According to information available on the website of the Ministry of Ports, Shipping, and Waterways, there are 12 major ports and 200 minor ports in the country.

Each major port is governed by a board of trustees appointed by the Union government. The trusts operate on the basis of policy directives and orders from the Government of India. Their functions include planning and managing operations of the ports. The tariffs for major ports are fixed by the Tariff Authority for Major Ports (TAMP).

The major ports in the country are in Chennai, Cochin, Navi Mumbai (Jawaharlal Nehru Port), Kandla, Kolkata, Mumbai, New Mangalore, Mormugao, Paradip, VO Chidambaranar, Kamarajar, and Visakhapatnam.

Minor ports are managed at the state level, by the state government or State Maritime Boards in the case of states such as Gujarat, Maharashtra and Tamil Nadu, which function in a manner similar to the trusts of the major ports.

They also focus on attracting private investment by awarding concession contracts, providing incentives, exclusivity rights and assuring land acquisition.

Maritime State Development Council (MSDC) is an apex advisory body that aims to ensure integrated development of major and minor ports. Constituted in 1997, the MSDC monitors, in consultation with state governments, the future development of the minor ports by their respective states, and makes suitable recommendations.

What is the Major Port Authorities Bill, 2021?

The Major Port Authorities Bill, piloted by former Minister of State (MoS) for Ports, Shipping and Waterways Mansukh Mandaviya, was passed by the Parliament on 10 February 2021.

The Major Port Authorities Act, with the intention of decentralising power, provides for the formation of a Board of Major Port Authority for each of the major ports. These boards will replace the existing Union government-appointed port trusts.

The board for each major port will include representatives from the state government, Ministry of Railways, Ministry of Defence, Ministry of Customs, and the Department of Revenue as members. In addition, the board will have a government nominee member, as well as a representative of the employees of the Major Port Authority.

Some salient features of the Act, which comes as a replacement of the earlier enforced Major Trusts Act, 1963, are as follows:

• The role of Tariff Authority for Major Ports (TAMP) has been redefined. The Port Authority has now been given powers to fix the tariff, which will act as a reference tariff for purposes of bidding for PPP (public private partnership) projects. The Board of Port Authority has been delegated the power to fix the scale of rates for other port services and assets, including land.

• An adjudicatory board will be constituted by the central government to carry out the residual functions of the erstwhile TAMP. It will look into the disputes between ports and PPP concessionaires, review stressed PPP projects, and suggest measures to revive them, among other things.

• The Boards of Port Authority have been delegated full powers to enter into contracts, planning and development, and fixing of tariff, except in matters of national interest, security, and emergency, arising out of inaction and default. Under the previous MPT Act, 1963, prior approval of the central government had been required by the port trusts in 22 instances.

Why Was This Bill Introduced?

According to the Ministry of Ports, Shipping and Waterways, the Major Ports Trust Act of 1963 was deemed to be restrictive, with major ports "finding it difficult to operate in a highly competitive environment and respond to market challenges".

Further, the board of trustees was felt to be too large and disparate to allow efficient decision making.

The newly passed Major Port Authorities Act, 2021, bestows upon the major ports an increased level of autonomy. With the diminished control of the TAMP, the authority boards for each port will now be vested with the power to frame their own rates and charges in accordance with the market conditions, enabling them to vie with their private competitors.

"With a view to promote the expansion of port infrastructure and facilitate trade and commerce, the Major Port Authorities Bill 2020 bill aims at decentralizing decision making and to infuse professionalism in governance of major ports. It imparts faster and transparent decision making benefiting the stakeholders and better project execution capability. The Bill is aimed at reorienting the governance model in central ports to landlord port model in line with the successful global practice."

Ministry of Ports, Shipping and Waterways

"This will also help in bringing transparency in operations of major ports. This will empower the major ports to perform with greater efficiency on account of full autonomy in decision making and by modernizing their institutional framework," the ministry stated in an official release.

What are the Objections of the Opposition Against the Major Port Authorities Act, 2021

The Major Ports Authorities Bill, which was cleared in the Rajya Sabha in February, received 88 votes in its favour and 44 against.

The Bill had received staunch resistance from the Opposition, which alleged that the legislation intended to pave way for the privatisation of ports.

"The Bill seeks to replace the Major Port Trust of 1963 with Major Ports Authority. The government has adopted a policy of selling all public sector undertakings, public properties. This Bill is a retraction of the Singapore model. Corporatisation is the first step. The next step in the offing is privatization. While drafting this Bill, the recommendations of the standing committee ought to have been considered by the government and the same should have been reflected in the Bill. The interests of the state governments where ports are situated have also been overlooked. It is detrimental to the interests of the state governments."

TMC MP Sukhendu Roy

Arguing along the same lines, Congress leader Shaktisinh Gohil, speaking in the Rajya Sabha, stated: "Experts are apprehensive that this law will provide backdoor entry to crony capitalists into our ports."

Responding to these concerns, the then Minister of Ports Mandaviya, who had presented the bill, said, "This Bill is not for privatisation of any port. This will enable our ports to compete with private ports," adding that the old Act had been implemented in 1963, when there was no competition from private players.

Why Goa Objects to the Major Port Authorities Act, 2021?

Goa Chief Minister Pramod Sawant, on 17 June, wrote to the Union ministry, requesting a reconsideration of the Major Port Authorities Act, taking in view its difference with the Goa's Land Revenue Code and other state Acts, after concerns regarding the newly passed bill had been raised by members of the state's legislative assembly.

At a state Assembly session on 29 July, former chief minister and veteran Congress leader Luizinho Faleiro observed: "The new law had "the potential to usurp the powers of the state and local bodies with regard to land use and town planning," The Indian Express reported.

Responding to Faleiro, Minister of Town and Country Planning Chandrakant Kavlekar stated in the Assembly that the fallout of the Act will include redundancy of state laws – such as Goa Town & Country Planning Act and the Regional Plan/ODPs prepared there under, Goa Municipalities Act, Goa Panchayat Raj Act, Goa Land Development and Building Construction Regulations, 2010 and Goa Land Revenue Code – in the areas that will come under the boards of the major ports, as per an IE report.

Goa Forward Party president Vijai Sardesai had also raised his concerns regarding the Bill on a separate occasion.

What is the Draft Indian Ports Bill, 2021?

The Draft Indian Ports Bill, 2021, proposes to transform the existing management system for minor ports, which are presently under the jurisdiction of state governments or state maritime boards.

The bill provides to confer upon the centrally instituted Maritime States Development Council, which is presently an advisory body, the authority to plan, develop, and control minor ports – powers which have hitherto been practised by the state governments.

The Draft Bill empowers the MSDC to perform such other functions including such administrative and financial functions as may be entrusted to it by the Central Government.

"The up-to-date provisions of the proposed Bill would ensure safety, security, pollution control, performance standards and sustainability of Ports," a government statement said.

The Bill also seeks to provide increased opportunities for public and private investments in the Indian maritime and ports sector.

Why Was the Draft Indian Ports Bill Introduced? 

Mandaviya, speaking about the Draft Bill at an MSDC meeting on 24 June, said that it "will facilitate to have optimum management and utilization of the coastline by way of participation by both the Union Government and Maritime States/Union Territories".

Stressing on the need for the Indian Port Bill 2021, Mandaviya said that the objective of the MSDC is to develop a national plan for the development of the maritime sector that is beneficial for both the states and the Centre.

He further stated that the development of the country depended on the development of the states, and that the MSDC is the best example of cooperative federalism.

What Objections Have Been Raised to the Draft Indian Ports Bill 2021?

The Draft Indian Ports Bill, 2021, has met widespread opposition from the coastal states of Gujarat, Andhra Pradesh, Tamil Nadu, and Odisha. The states have protested the proposed dilution of their authority over the minor ports, which drive the states' economy.

Tamil Nadu Chief Minister MK Stalin, in a letter dated 22 June, had urged the chief ministers of nine coastal states to register their dissent against the Draft Bill, saying, "Many powers currently exercised by state governments would be taken over by the Union government".

"This move of the Central government to bring a new Bill will have long-term adverse implications on the management of minor ports, since the State Governments will not have any major role anymore, if the Bill is passed," Stalin stated in the letter.

Odisha, which is in the process of instating its own maritime board, also wrote to Union minister Mandaviya, voicing its concerns.

“The proposed provision, instead of making India a strong maritime nation, will stunt the growth of the port-led development in the nation through the centralisation of its authority," Odisha Commerce and Transport Minister Padmanabha Behera said in the letter dated 29 June, The Times of India reported.

The letter further observed that assigning routine functions, such as conducting of enquiries, deciding tariff structure and so on, to the MSDC, would reduce the efficiency of ports' functioning.

Last year, the Gujarat Maritime Board, a statutory body under the BJP-led Gujarat Government, had also argued against the centralisation of power proposed under the Bill, claiming that it would render the long-running maritime board almost redundant, The Indian Express reported.

(With inputs from Times of India and The Indian Express)