DRY PORTS

DRY PORTS by shivani and Megha Nayyar


India has a long coastline spanning 7600 kilometres forming one of the biggest peninsulas in the world. It is serviced by 12 major ports and 185 notified minor and intermediate ports].
Major ports handled over 80% of all cargo traffic . However, the words "major", "intermediate" and "minor", do not have a strict association with the traffic volumes served by these ports. As an example, Mundra Port, a newly developed minor port in the state of Gujarat registered a cargo traffic of around 28.8 million tonnes per annum during the financial year of 2008, which is higher than that of many major ports
The classification of Indian ports into major, minor and intermediate has an administrative significance. Indian government has a federal structure, and according to its constitution, maritime transport falls under the "concurrent list", to be administered by both the Central and the State governments. While the Central Shipping Ministry administer the major ports, the minor and intermediate ports are administered by the relevant departments or ministries in the nine coastal states of West Bengal, Orissa, Andhra Pradesh, Tamil Nadu, Kerala, Karnataka, Goa, Maharashtra and Gujarat. Several of these 185 minor and intermediate ports are merely "notified", with little or no cargo handling actually taking place. These ports have been identified by the respective governments to be developed, in a phased manner, a good proportion of them involving Public-private partnership.
Cargo handling is projected to grow at 7.7% until 2013-14. Some 60% of India’s container traffic is handled by the Jawaharlal Nehru Port Trust inMumbai. It has just 9 berths compared to 40 in the main port of Singapore. It takes an average of 21 days to clear import cargo in India compared to just 3 in Singapore.
IMPORTANCE OF MARINE SECTOR


• Marine transportation plays a key role in Global economy
• 90% of the world’s trade involves shipping
• Importance of water transport is increasing with economic Globalization
• Only mode of transport that can effectively linked the centers of industrial production to their markets . Ports in developing countries represent a key asset for economic development

• They need to operate efficiently and be properly structured in order to support an increase in trade and GDP by linking countries, both coastal and land locked, productive hinterland and consumers to global markets
• Through their nodal role of facilitating intermodal transport ports have a significant role in contributing towards achievement of the Millennium Development Goals,


• They need to operate efficiently and be properly structured in order to support an increase in trade and GDP by linking countries, both coastal and land locked, productive hinterland and consumers to global markets

• Through their nodal role of facilitating intermodal transport ports have a significant role in contributing towards achievement of the Millennium Development Goals,
INDIAN PORT SECTOR SCENARIO
At the central level, the Department of Shipping of the Ministry of Shipping, Road Transport and Highways (MoSRTH) is responsible for formulating policies and overseeing the sector.
} At the state level, the maritime boards oversee non-major ports in Gujarat, Maharashtra and Tamil Nadu. In other states, port departments of the respective state governments oversee non-major ports.








WHAT IS MAJOR AND NON-MAJOR PORTS

The Indian port sector has been broadly divided into - Major ports and Non-major ports.
The technical nomenclature Major and Non-major is based on the legal distinctions made under the two key source laws viz. Indian Ports Act 1908 and Major Ports Act 1963.
The distinctions between the Major and Non-major Ports is in terms of the distribution of maritime jurisdiction between the Central and State governments.
Major ports are listed in serial 27 of the Constitution and are administered under Major Port Trust Act of 1963. All ports, other than major ports are listed under the concurrent list of the Constitution and administered jointly by Central and State governments under the Indian Port Act 1908.




LEGAL FRAMEWORK OF PORTS

} In 1998, the foreign direct investment (FDI) limit in the port sector was raised to 74 per cent and subsequently, in 1999, 100 per cent FDI in the sector.
} In 1998, the shipping ministry came out with Guidelines for Private Sector Participation in Ports” through JVs and foreign collaborations.
} In 2000, the Major Port Trusts Act, 1963 was re-amended to allow major ports to form JVs with non- major foreign ports and companies.
} During 2003, Rail Vikas Nigam Limited (RVNL), a Special Purpose Vehicle (SPV), was created to undertake rail-port connectivity projects under the National Rail Vikas Yojana (NRVY) which was initiated in 2002.

} In August 2004 - Formulation of the Draft Maritime Policy. The draft maritime policy, which is still awaiting final cabinet approval, has been partially implemented.
} In July 2004, the ISPS Code, which is a set of regulations designed for maritime security, came into force.
} Sethusamudram Ship Canal Project (SSCP) and the National Maritime Development Programme (NMDP)- were launched in 2005, in May and December respectively.
} The Rs 993.44 billion NMDP aims to increase capacity levels, enhance private investment, improve service quality and promote competition in the maritime sector.
} In January 2006 beginning of port based SEZ - approval of Vallarpadam and Puthuvypeen within the Cochin Port Trust area
} The main highlight of 2008 was the approval of the new model concession agreement (MCA) by the union government in January.



} PRIVATE SECTOR PARTICIPATION

· Inter-port and intra-port competition.
◦ Generally by tender; provision for nomination for captive facilities.
◦ Obligation to take workers in case of lease of existing facilities.
◦ Provision to handle operations outside strikes / breakdowns, etc.
◦ Preference to Indian companies except in few ports.
◦ Trade to be consulted before charges affecting them are amended.


} LAND MATTER

◦ Full powers to ports for leasing of land up to 30 years.
◦ Ports to be allowed to renew lease in favour of sitting occupants.
◦ Provision for subletting / partially subletting.
◦ Port Land not to be given for religious purposes.
◦ Change of land use as per land use. be allowed.
◦ Annual escalation reduced from 5% to 2%.




REGULATORY FRAMEWORK


◦ TAMP will be strengthened.
◦ Cost plus approach will be replaced by normative approach.
◦ Increase in efficiency by the private investor to be rewarded.
◦ Enforce and extend ISPS code implementation and adhere to IMO Conventions
◦ Measures for Wreck Removal, Oil Spill Management at Ports consistent with international norms.




NATIONAL MARITIME DEVELOPMENT PROGRAM- (NMDP)

} Introduction:
◦ National Maritime Development Programme launched in December 2005
◦ Programme being formulated to enhanced private investment
◦ Utmost importance is given to development of Infrastructure
◦ This programme would assure a good framework for facilitating Public and Private investments and competitions and improved efficiency.


} Focus Area :

◦ Deepening port channels - higher drafts
◦ Modernization of the system and usage of latest technology
◦ To exploit potential of hinterland
◦ Setting up Maritime Universities
◦ Promote training for better manpower
◦ Encouragement to inland water transport
◦ Development of sea waterways and SPMs through private sector participation
◦ Enhancement of coastal shipping
◦ Navigational safety
◦ Ship building and repairing yard
◦ Minor ports have to play important role in creation of capacity


INDIAN PORTS- AREAS ALLOWED FOR PRIVATE SECTOR PARTICIPATION


(a) Leasing out existing port assets;
(b) Construction/creation of additional assets, such as:
(i) Construction and operation of container terminals;
(ii) Construction and operation of bulk, break-bulk, multi-purpose and specialized cargo berths;
(iii) Warehousing, container freight stations, and storage facilities;
(iv) Cranage/handling equipment;
(v) Setting up of captive power plants; Dry docking and ship repair facilities.
(c) Leasing of equipment for port handling and leasing of floating crafts from the private sector;
(d) Pilotage;
(e) Captive facilities for port-based industries.


PORT LED DIRECT DEVELOPMENT

Capital goods
Ship Building
Fisheries
Refineries
Core Industries
Power Projects
POL Chemical
Cement Plants


PORT LED OTHER DEVELPOMENT

· Cold Chain
· Warehouses
· Area Development
· Revenue Generation
· Ancillary Industries
· Employment
· Tourism
· Green development



ISSUES

} Way behind international developments.
} Not a single port in top ten
} Severe connectivity issues
} No major shipping line in the country
} Poor levels of containerization
} Lack of seamless customs procedures
} Crippling man-power constraints
} Economy not export driven
} Hiatus between centre and State







OVERVIEW
SIZE
· Indian ports handled cargo of 510 million tonnes in 2004-05, 10.8% increase over 2003-04
· 80% of the port traffic by volume is dry and liquid bulk, remaining 20% is general cargo, including containers
o Containerised cargo has grown at a rate of 15% p.a. over the last 5 years
· India has 12 Major Ports and 185 Minor Ports along 7,517 km long Indian coastline
o Cargo handled by Major Ports has increased by 9.5% p.a. over last 3 years
o Major ports handle 75% of the total traffic

The JNPT port where thecapacity will be over3 million TEU by 2006
The port sector has seensignificant investment bymajor global port operators

· Of the 12 Major Ports, 11 ports are run by Port Trusts while the port at Ennore is a corporation under the Central Government. These ports handled 383 million tonnes of cargo in 2004-05
· Two major Government projects underway:
o Project “Sethusamundram”: Dredging of the Palk Strait, in Southern India to facilitate maritime trade through it
o Project “Sagarmala”: $22 billion project for the modernisation of Major and Minor Ports



STRUCTURE
· Government of India dominated maritime activity in the past. Policy direction is now oriented to encouraging the private sector to take the lead in port development and operations


· Many Major ports now operate largely as landlord ports - International port operators have been invited to submit competitive bid for BOT terminals on a revenue share basis
· Significant investment on BOT basis by foreign players including Maersk (JNPT, Mumbai) and P & O Ports (JNPT, Mumbai and Chennai), Dubai Ports International (Cochin and Vishakhapatnam) and PSA Singapore (Tuticorin)
· Minor ports are being developed by domestic and international private investors: Pipavav Port by Maersk, Mundra Port by Adani Group (with a terminal operated by P & O)


POLICY
· 100% FDI under the automatic route is permitted for port development projects
· 100% income tax exemption for a period of 10 years
· Tariff Authority of Major Ports (TAMP) regulates the ceiling for tariffs charged by Major ports/port operators (not applicable to Minor ports)
· A comprehensive National Maritime Development Policy is being formulated to facilitate private investment, improve service quality and promote competitiveness.




Cargo handled by Major Ports in India
Major Port
Trade(04-05, MMT)
Container Traffic(04-05)(million TEU*)
Chennai Port
44
0.62
Cochin Port
14
0.19
Ennore
9.5
—
Haldia
36
0.13
JNPT
33
2.37
Kandla Port
42
0.18
Kolkata Port
10
0.16
Mormagao
31
0.01
Mumbai Port
35
0.22
New Mangalore Port
34
—
Paradip Port
30
—
Tuticorin Port
16
0.30
Vizag Port
50
0.05
Source: Indian Ports Association
* Twenty foot equivalent unit

OPPORTUNITY
OUTLOOK
· Cargo handling at all the ports is projected to grow at 7.7% p.a. till 2013-14 with Minor ports growing at a faster rate of 8.5% compared to 7.4% for the Major ports
o Traffic estimated to reach 960 million tonnes by 2013-14
o Containerised cargo is expected to grow at 17.3% over the next 9 years
· The New Foreign Trade Policy envisages doubling of India’s share in global exports in next five years to $150 billion
o A large portion of the foreign trade to be through the maritime route: 95% by volume and 70% by value
POTENTIAL
· Growth in merchandise exports projected at over 13% p.a. underlines the need for large investments in port infrastructure
· Investment need of $13.5 billion in the major ports under National Maritime Development Program (NMDP) to boost infrastructure at these ports in the next nine years
o Under NMDP, 219 projects have been identified for the development of Major ports
o Public–Private partnership is seen by the Government as the key to improve Major and Minor ports
§ * 64% of the proposed investment in Major ports envisaged from private players
· The plan proposes an additional port handling capacity of 530 MMTA in Major Ports through:
o Projects related to port development(construction of jetties, berths etc.)
o Procurement, replacement or up-gradation of port equipment
o Deepening of channels to improve draft
o Projects related to port connectivity
· Investment need of $4.5 billion for improving Minor Ports



DRY PORTS


In recent times, global trade, in line with it the Indian foreign trade has grown phenomenally both in terms of volume and complexities. Infrastructure needs and innovative methods in logistics management are growing hand in hand with the International trade needs. Ports these days mainly act as gateways and cater to the hinterlands of India which are now serviced by the advent of ICDs. ICDs thus generate business opportunities, general employment and global competitiveness of the local industry.





} A DRY PORT IS AN INLAND INTERMODAL TERMINAL DIRECTLY CONNECTED TO A SEAPORT BY RAIL, WHERE CUSTOMERS CAN LEAVE AND / OR COLLECT THEIR STANDARDISED UNITS AS IF DIRECTLY TO THE SEA PORT


} “Dry port is a yard used to place containers or conventional bulk cargo, usually connected to a seaport by rail or road”. - Wikipedia








CONTAINER TERMINALS(ICD/CFS)
REGIONAL TALLY

Region
CONCOR’s
Others
Total
Northern India
15
22
37
Southern India
10
58
68
Western India
13
39
52
Central India
9
-
9
Eastern India
8
3
11
Total
55
122
177


RATIONALE & SIGNIFICANCE

} An ICD or a CFS, located away from a seaport, providing facilities for cross-border trade in close vicinity of production/consumption in hinterland, with linkages to gateway ports.
◦ A common user facility, for handling and temporary storage of import/export, laden/empty containers, for clearance by Customs for home consumption, warehousing, onward transit, or export.
◦ A CFS: generally on off-dock facility close to servicing port, helping decongest port by shifting cargo and customs-related activities outside the port.
◦ Also set up inland for linkage to a regional rail-linked ICD and to gateway port(s) by road.
} In India, only 40 dry ports close to seaports; all others – 137 – inland.

INSTITUTIONAL FRAMEWORK: A VITAL FACTOR


} IMC (Inter-Ministerial Committee):
◦ for appraisal and approval of applications for ICDs/CFSs
◦ Ministry of Commerce and Industry: nodal agency, coordinating with Ministry of Shipping, Roads and Highways; Ministry of Railways; Ministry of Finance
} IMC approval implies:
◦ single-window facility for mandatory clearances, payments, and incentives certification: presence of Customs, banks, shipping lines and agents, NVOCCs, CHAs, transport operators.


LEGAL AND LIABILITY FRAMEWORK:


◦ Multimodal Transportation of Goods Act, 1993
◦ Refinement of Motor Vehicles Act
◦ Single document of carriage – for inland transportation with clear liability and quick claim settlement terms.




Public-Private Partnership

— Consistent with country’s concerted strategy, towards blending synergy and strength of state and private sectors in finance, management and technology, PPP steadily materialises in infrastructure sectors.
- All recent container terminals at ports heralded PPP concept, e.g., at JN port, Chennai, Tuticorin, Visakhapatnam, Cochin.
- New large CFSs developed in PPP mode in collaboration with CONCOR.
- Intermodal rail networks developed as PPP projects, linking Gujarat coast ports by Pipavav Rail Corporation and Kutch Railway Co.
- Public sector Central Warehousing Corporation generated an ingenious model for its CFSs being managed and operated by private sector enterprises.
- Several inland CFSs uniquely managed as public-public partnership – CONCOR as a Central sector PSU joined hands with many state warehousing corporations to optimally manage and operate them.
- Dry port development in India itself a good blend of private sector and state sector: 108 of them set up by different public sector corporations, 69 others by private companies.
- Some 14 private sector companies now registered with IR for owning rolling stock and operating container trains in addition to CONCOR.





} Customs clearance made easy


◦ Risk Management System (RMS) for selective screening of only high-risk cargo for customs examination.
◦ Faster delivery system by creating separate area in port premises earmarked for instant delivery of cargo to specified accredited importers.
◦ Simplified procedure for amendment of IGM
◦ Simplified customs procedure for transshipment between gateway port and dry port (ICD/CFS).
◦ LCL carrying containers allowed movement from one CFS to another CFS for final consolidation/stuffing.
◦ Customs messages exchange with ports, airports, ICDs/CFSs, CONCOR, banks and DGFT.
◦ Facility of customs duty payment through more banks and via e-banking.
◦ 24x7 operations.








Conclusion

India’s ports are working well and their use is increasing at high speed , due to increase in its work ICD have developed which decrease its work load and helps in increasing efficiency of ports. Indian govt. is going to develop more ICD
in north region due to its effectiveness.
Today India’s most of the exports are send through ships and custom clearances are done their only.