“Taxation policy can be tweaked to encourage the sector”

Noor Mohammed Delhi
APVN Sarma, Secretary to the ministry of shipping, in conversation with Hardnews on key issues concerning Indian ports and the shipping sector

What are the key bottlenecks hampering growth of the port sector?
There are no such bottlenecks. We have made significant progress in expanding port capacity in recent years.

How are the expansion projects at the major ports progressing?
These projects are running smoothly after initial delay of two years. A total of 276 projects have been envisaged by the ministry to be taken up under the National Maritime Development Programme (NMDP) with an estimated investment of Rs 55,000 crore. Of these, 69 projects involving an investment to the tune of Rs 16, 000 crore are currently under implementation. Some 43 projects have been completed with expenditure of Rs 4,500 crore. Another 23 projects are lined up for tendering and require investment of Rs 7,500 crore. We have also approved 21 projects for implementation. These projects - which will add 118 million tonnes of cargo handling capacity -- are to be implemented at an estimated cost of Rs 5,600 crore. Meanwhile, 21 port projects with an estimated investment of Rs 7,800 crore are being implemented at the state level.

What more needs to be done to improve efficiency at major ports?
More emphasis needs to be laid on mechanisation of berthing facilities. In addition, labour issues also need to be resolved.

How is the flow of private investment in the sector?
We are satisfied with the current inflow of private investment, though more is always desired.

How successful has been the public-private partnership (PPP) model in the port sector?
Response is very good. Private terminals are being built through the PPP model. States are encouraging developers to set up ports under this route.

Why are some PPP projects caught in litigation?
We cannot prevent litigation. Actually, we do not want monopoly to be created in terminal business. That is why we have put in provisions in tendering documents so that a developer that has already bagged a berthing project is barred from bidding for the next immediate berth project, though the developer can always bid for the implementation of any other berth.

What is the latest status of the envisaged inland  waterway project?
We are in talks with companies like NTPC who have plants along the identified route and make bulk imports of coal to meet fuel requirements for their power plants. The reserves of good-quality coal in India have already been consumed and now only inferior-quality coal is available. Use of this poor-quality coal can damage power plant boilers. So utilities will need to use blended coal instead of purely domestic coal. This would entail bulk import of coal by utilities on a regular basis. Utilities can import coal at cheaper rates under long-term contract. Transportation of coal through inland waterways will cost less compared to railways.

How are Indian shipping lines doing?
Given that the international shipping industry is very competitive, domestic shipping lines are doing well. Currently, the share of domestic vessels in international cargo works out to 10 per cent. However, taxation policy can be further tweaked to encourage the sector. Turnover tax was a good idea. But the industry has been discouraged by additional taxes.

Your views on domestic shipbuilding industry...
Shipbuilding is a labour-intensive business. The Indian shipbuilding industry is internationally competitive and creates jobs. Since most of the ships are built here for overseas customers, the industry also earns dollars for the country.

What new policy initiatives are being taken by the ministry to encourage the sector?
The ministry has set up a committee under the chairmanship of Director-General, Shipping to look into Shipping Trade Practices Act. The idea is to create a balance between the interests of shippers and shipping lines.