The Major Port Authorities Bill, 2020: The Landlord Model of Port

Pritesh Raj*

With a coastline of more than 7500 kilometres, India is the world’s sixteenth largest maritime country. The significance[1] of India’s trade through maritime means can be estimated from the evident fact[2] that 95 percent in volume of trade and 70 percent in value of trade is done through maritime means, thus contributing substantially to India’s GDP and a blind eye cannot be turned toward its working.  

The two essentials of maritime trade are vessels and port without which it cannot be executed. It is the vessels through which trade and transportation of goods and people are executed while it is at the ports where vessels dock to load and unload goods in order to execute their trade. Thus it is vital that due care is taken of both the essentials.

OLD ACT

Currently Indian ports are governed by two different acts, namely The Major Port Trusts Act, 1963[3] (“The Act”) and The Indian Ports Act, 1908,[4] the former of which governs 12 major ports situated at both east and west coast of India, whereas the later governs around 200 minor ports across the country which includes both sea and inland (ports which are situated on the banks of river or beside a large water body) ports. The twelve major ports of India governed by The Act are responsible for the bulk[5] of trade through waterways (Primarily Sea), both domestic and international.

THE NEW BILL

In March 2020, The Major Port Authorities Bill, 2020[6] was presented before the parliament by Minister of State for Shipping[7] to replace the old Major Port Trust Act, 1963 as the governing legislation for twelve Major Ports in India namely Chennai, Cochin, Jawaharlal Nehru Port, Kandla, Kolkata, Mumbai, New Mangalore, Mormugao, Paradip, V.O. Chidambaranar, and Vishakhapatnam. This Bill will apply only to the twelve major ports of India and not the other minor ports which will continue to be governed by the Indian Ports Act, 1908. This bill was introduced to pay particular attention to the major ports which are termed to be epicentre of export and import from and in India. Under The Act, all major ports are managed by a Board of Port Trust[8] whereas The Bill seeks to replace it with a Board of Major Port Authority[9] which will have absolute control over all the financial dealing and administrative aspect of the port.

It seeks to considerably reduce the complexities present in the archaic Act by eliminating unnecessary provisions present by amalgamating 136 sections present in the existing Act into one single Bill with just 76 sections which will covers all the essential provisions. This in turn will reduce the complexities present in The Act and ensure ease of doing business for traders as well as contractors employed under a specific contract at the port. Further on to make the decision making process at tip of the pyramid more simplified The Bill has promulgated an oversight board of 13 to 14 members[10] instead of the earlier 18 to 19 member board which will have control over the port. The decrease in membership of the board will in turn help in decreasing the time spent on deliberations over what actions are to be taken by the port authority and will accelerate the decision making process by the board. 

The Bills further restructure’s the Corporate Social Responsibility policy of all the major port by incorporating provisions[11] which seeks to promote healthcare, education and skill development as niche areas which will be paid particular attention. The CSR has been structured[12] in such a manner that it will indirectly help the port authority in several aspects. The skill development initiative by the port authority for instance will help bring more and more skilled employees, as well as enhance the skill of those already employed by the port authority whereas the healthcare will provide the port area with necessary medical facility for workers as well as residents nearby.    

This bill is the result of government determination to bring in more private entities into the shipping sector. It promotes landlord model[13] of port wherein the Port authority acts as an adjudicating body with whom lies the final say whereas the private entity are ones who carry out numerous day to day port operations they are contracted to do under concession contracts. Inclusion of such a provision can be said to be the present government’s move toward fulfilment of its rally cry “Minimum Government, Maximum Governance[14]”.

Moreover The Bill ensures that there’s proper check and balance over functioning of the port board. Section 46[15] of the Bill gives the government power to review the work of the board to ensure proper functioning of the port. Supplementing the above mentioned provision,[16] The Bill further postulates a situation wherein if the central government finds the work of the board as unsatisfactory then it can take over the reins of the port for a time period not exceeding twelve months within which it will have to appoint a new Board to overlook the functioning of the port.

FINANCIAL POWERS OF THE BOARD UNDER THE BILL

The bill when enacted will entrust the board with immense responsibility and will bestow upon it decision making power with regards to how it would allot its fund and revenue[17] amongst necessities which will eventually surface over time. If need arises and the port authority deems fit then it can declare any of the port assets available for any other activity under Section 22[18] with the only prerequisite that the activity for which it is being reassigned should be related to port business. 

Trade in Import and Export industry are very easily affected by multiple variables like bilateral and multilateral relations, epidemics, famine, deficit and numerous more because of its volatile nature. In order to keep up with the fluctuating needs of economy and the state, the board will have the authority to provide remission or exemption[19] from paying any tariff on any goods loaded/unloaded or vessel docked/undocked. So now instead of going to a central government authority, the port authorities can take such decision by their own volition. This will allow the port authority to take necessary actions without any undue delay and thus will be convenient for both the authority and the traders.  This Bill also gives the Board reigning power over all the asset and fund to utilise it for the development of the port which they deems fit. Moreover Section 33[20] of the bill bestows the board with the power to raise loan when deemed necessary from any financial institution in India as well as any other financial institution situated in a foreign nation if it fulfils the necessary norms. In addition to above provision clause 2 of the said section also gives the board prerogative to procure loan on port securities. This will go a long way toward providing the board with the necessary autonomy to manage and operate the port.

Penalties in the Act were stipulated at a maximum of ten thousand rupees which can be fined if any of the provision of the act is not followed but the Bill increases the threshold limit of penalty form earlier ten thousand rupees to one lakh rupees for situation where any of the provision of the bill are disobeyed.

DRAWBACKS

In its bid to make the Bill more simplistic, government has not delved into numerous provisions related to essential aspects of the major ports which should have been incorporated into the bill. This leaves the Bill devoid of necessary regulations related to several key aspects. Provisions  pertaining to penalty for instance have been extensively expounded in The Act but The Bill just espouses the maximum fine which can be imposed on any individual or entity who flouts rules and regulations laid down in The Bill.

Further on the bill has give considerable leeway to the port with regards to its decision making power. Instead of giving such an absolute authority to the board on numerous matters government could have formed two different  statutory authorities under this very Bill for both East and West coast, making it mandatory for the port authority to gain required sanctions from the committee before they could take any major step related to financial aspect of the board.

CONCLUSION

Shipping industry, being the most essential medium of trade for India needs special attention, particularly the major ports which are responsible for hefty chunk of Indian trade. This revamping of authority regulating the Major Ports of India is prudent and can go a long toward making the ports more inclusive by changing the working of port into both simplistic and profitable at the same time. The infusion of private entity in the day to day functioning of the port will provides it with the necessary professionalism and freedom to change its modus operandi when deemed fit. The port authority can focus more on the development prospect of the port instead of the day to day operations of the port which will be assigned to a private entity on contractual basis. Moreover the centralised governance of port will empower the board authority to intervene in the functioning of private entity employed on contractual basis when deemed necessary.

About the Author

*Pritesh Raj is a first year student at National University of Study and Research in Law, Ranchi.


[1] Indian Defence Review, Economic and Strategic importance of Sea in Modern Indian Context, February 23, 2019, http://www.indiandefencereview.com/spotlights/economic-and-strategic-importance-of-sea-in-modern-indian-context/ (Last visited on July 6th, 2020)

[2] India Brand Equity Foundation, Shipping Industry and Ports in India, June 2020,  https://www.ibef.org/industry/ports-india-shipping.aspx#:~:text=According%20to%20the%20Ministry%20of,be%20developed%20in%20the%20country. (Last visited on June 5th 2020)

[3] The Major Port Trust Act, 1963

[4] The Indian Port trust Act, 1908

[5] Indian Ports Association, Home, http://www.ipa.nic.in/ (Last visited on July 6, 2020)

[6] The Major Ports Authority Bill, 2020

[7] Sagarmala, Home, http://sagarmala.gov.in/ (Last visited on July 6, 2020)

[8][8] The Board of Port Trust, 1963, §3.

[9] The Major Port Authority Bill, 2020, §3

[10] PRS Legislative Research, The Major Port Authorities Bill, 2020, https://www.prsindia.org/billtrack/major-port-authorities-bill-2020 (Last visited on 7th July 2020)

[11] The Major Port Authority Bill, 2020 § 3

[12] The Major Port Authority Bill, 2020 § 70

[13] Port Reform Tool Kit, Alternative Port management Structure and Ownership Model https://ppiaf.org/sites/ppiaf.org/files/documents/toolkits/Portoolkit/Toolkit/module3/port_functions.html (Last visited July 10 2020).

[14] Narendra Modi, Minimum Government, Maximum Governance, May 14 2014, Minimum Government, Maximum Governance (Last visited July 10, 2020)

[15] The Major Port Authority Bill, 2020, §46

[16] Major Port Authority Bill, 2020, §48 Cl. 1(b).

[17] PRS Legislative Research, Bill Summary, https://www.prsindia.org/node/845107/chapters-at-a-glance (Last visited July 10, 2020)

[18] The Major Port Authority Bill, 2020, §22

[19] PRS Legislative Research, Bill Summary, https://www.prsindia.org/node/845107/chapters-at-a-glance (Last visited July 10, 2020)

[20] The Major Port Authority Bill, 2020, §33

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