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Boosting Autonomy for India’s State-Owned Ports: A Path to Competitiveness
Context:
Building on its case to transform India’s state-owned ports into self-reliant commercial entities, the Ministry of Ports, Shipping and Waterways is considering expanding the autonomy of major ports in making decisions regarding capital expenditure (capex).
- Key Reforms in Capital Expenditure Management:
- Independent Decision-Making for Capex
- The proposed reforms will allow major ports to independently decide on capital expenditure (capex) projects, provided they rely on their internal financial resources.
- This initiative aims to reduce dependency on external bureaucratic approvals, facilitating faster decision-making.
- Tiered Approval System
- Currently, ports can approve capex up to ₹100 crore without requiring central government consent.
- The new framework introduces a tiered system, categorising ports into four groups based on operational scale. Each category will have specific capex limits.
- Expenditures beyond ₹500 crore will still need approval, but these approvals will now involve inter-ministerial bodies like the GatiShakti Network Planning Group, the Public Investment Board, and the Union Cabinet, rather than the Ministry of Shipping.
- Enhanced Powers for Major Ports
- Building on the autonomy granted through the 2021 legislative reforms, the proposed changes aim to further empower larger ports such as Paradip, Vizag, and Kandla.
- These ports are strategically positioned to lead efforts in making state-owned ports commercially competitive and capable of matching the operational efficiencies of mega private ports.
- Creating a Level Playing Field
- Reversing Market Share Decline: Private ports have increasingly outpaced government-owned ports in market share over the past decade.
- In 2023-24, private ports handled 817 million tonnes (MT) of cargo compared to 721 MT managed by major ports.
- The proposed reforms aim to help state-owned ports regain competitiveness by operating as self-reliant commercial entities.
- Addressing Bureaucratic Inefficiencies
- These reforms address long-standing concerns over bureaucratic delays that hinder timely infrastructure investments. By reducing red tape, ports can undertake crucial projects faster, ensuring that modernization and expansion are not stalled.
Industry Support for the Changes:
Industry stakeholders and port officials have welcomed the move. A deputy chairman of a major port highlighted that granting greater decision-making power will prevent delays in implementing key projects, improving overall efficiency.
Benefits of Increased Autonomy:
- Faster Modernization: Ports will be better equipped to upgrade their infrastructure and adopt advanced technologies.
- Improved Competitiveness: Greater autonomy will help state-owned ports match the operational efficiency and market responsiveness of private ports.
- Economic Growth Support: Enhanced cargo handling capabilities will contribute to India’s trade and logistics growth.
- Alignment with CPSE Standards: By aligning with central public sector enterprises (CPSEs), ports can improve governance and financial performance.
- Revenue Growth: Streamlined processes and expanded capacities are likely to attract more cargo, boosting revenues.
