Industrial
Promotion Policies - Central Government
Draft Policy for Maritime Sector
(Ports, Shipping & Inland Water Transport)
Introduction
Infrastructure plays an important
part in fuelling economic growth. In particular, transportation
is a critical infrastructure, as it has backward and
forward linkages for connectivity of production centers
and markets, at home and abroad.
The importance of maritime infrastructure
in facilitating international trade is well recognized.
It is observed that about 95% by volume and 70% by value
of the country’s trade is carried on through maritime
transport. Having regard to the current level of India’s
share in global merchandise trade at around 0.67%, the
strengthening of the maritime infrastructure would have
a favourable impact on the country’s trade front
and also on economic growth. The country’s long
coastline of around 7517 kms. spread on the western
and eastern shelves of the mainland and also along the
Islands is a natural resource capable of being harnessed
for the country’s trade and tourism development.
The maritime sector of the country
encompasses, inter alia, ports (major and non-major),
shipping (overseas and coastal), inland water transport,
navigational aids besides trained manpower engaged in
the operations of the maritime sector, on board and
ashore. The entries relating to the development of maritime
ports are in the Seventh Schedule of the Constitution
of India and therefore under the purview of the Centre
and the States as well.
Policies of the Central Govt. regarding
the maritime sector have in the past addressed issues
of mismatches of capacities and traffic at major ports,
acquisition of shipping tonnage for facilitating cargo
carriage, the need to encourage inland water transport
and positioning of navigational aids as warranted from
time to time. The programmes in each of these sub-sectors
had been structured as part of Plan schemes of the Ministry
of Shipping (in the present form as also in the erstwhile
Ministry of Transport/Ministry of Surface Transport).
The liberalization in economic policies
initiated in the 1990s provided the impetus to the maritime
sector whereby private public partnerships have been
encouraged in provision of port and handling facilities;
side by side, the emergence of non-major ports through
proactive policies of some of the maritime States have
also ushered in a steadily growing share of maritime
traffic handled at these ports, especially through private
investment and by units for captive use of jetties and
terminals.
Based on the experience of
over 50 years of development efforts mainly by the Union
Government and also by select maritime States and the
potential of the maritime sector in facilitating economic
growth, it is felt that the policy framework regarding
ports, shipping and inland water transport should be
purposive to induct modern technology and achieve increased
levels of synergy and coordination. The policy would
address not only issues for strengthening the sector
through synergies of initiatives of the Centre and the
States but also encourage the flow of investments into
the sector - for upgradation of infrastructure and for
modernization of facilities in respect of maritime ports,
shipping and IWT sectors. In addition, the policy would
help assure the status and efficiency of fixed and mobile
maritime infrastructure and as a concomitant, ensure
that investments in human capital optimize the country’s
factor and resource endowments. As part of this comprehensive
strategy towards building a vibrant and responsive maritime
sector, reliable contractual procedures with built in
safeguards would also be positioned, wherever required,
to encourage competition. The prevalence of an independent
judicial system of the country assures a transparent
and healthy operational environment. Wherever required,
favourable fiscal reliefs would also be provided.
Considering the fact that cargo movement
from different modes within the country utilize more
than one mode of transport to reach the maritime port
for exports (and vice versa in respect of imports) and
the increasing recourse towards picking up and reaching
the cargo at the door of origin/destination, the need
for synergies amongst the different modes of transport
for such multi-modal transportation is well established.
This would require rationalization of the provisions
of Multi-Modal Transportation of Goods Act, 1993, to
support easy transportation and documentation through
different modes of transport.
At the present juncture, the policy
for maritime sector would also need to emphasise the
complementary roles of the modes in sharp contrast to
merely competitive functioning. The supplementary, and
sometime competing, modes of transport like road, rail,
air and pipelines need to be integrated with water transport.
Policy on a common platform encompassing the entire
transport network spanning different modes and addressing
critical issues such as pricing, timely deliveries and
cost effective service need to be positioned. In short,
a holistic approach would have to be adopted with due
emphasis on the role and effectivity of maritime transport.
The Policy for the maritime sector
would emphasise the importance of cost effective movement
of cargoes, transparency of decisions on objective considerations
in matters of investment decisions, the efficiency of
operations of the infrastructure as well as the relevance
of core competent maritime personnel. The programmes
under the Policy would address the following :-
(i) Modernizing the existing ports
and upgrading their facilities in order to bring them
on par with the leading ports of the world.
(ii) Developing new ports in order
to fully utilize the vast coastline of the country and
the available draft for deriving the maximum economic
advantage.
(iii) Promoting hinterland connectivity
to ensure least-distance access of the country’s
cargo to the ports and also offer choice of ports in
the region and terminals inside the ports to Trade.
(iv) Fostering Port specialization
and inter-port complementarity for overall optimization
of port facilities and the efficiency at the Ports.
(v) Facilitating the increased flow
of private investment, both domestic and foreign, and
at the same time ensure a competitive environment that
would preclude prospects of emergence of monopolies.
(vi) Providing for institutional safeguards
for the port infrastructure provider (public authorities/private
sector – be it domestic or foreign/joint ventures)
regarding investments and ensuring compliance of service
standards to the users.
(vii) Promoting multimodal transport
in the interest of time and cost efficiency.
(viii) Facilitating the acquisition
of Indian tonnage for securing a significant share for
the country in world tonnage and for increasing the
share of Indian bottoms in the carriage of the country’s
overseas traffic through cargo support to Indian flag
vessels.
(ix) Promoting and strengthening shipbuilding,
ship-repair and ship-breaking activities.
(x) Providing the necessary infrastructure
for turning out qualified Indian maritime personnel
of globally acknowledged excellence to benefit from
the growing demand of both foreign and Indian flag vessels
for such human capital.
(xi) Developing and integrating inland
waterways to the national transport network comprising
of maritime outlets as well as other points of interface
with other surface transport modes.
(xii) Building appropriate institutions
to support Training, R&D and other activities necessary
to sub-serve and sustain the Shipping and Port sectors.
(xiii) Assuring the state of the art
navigational aids at the country’s coastline with
a view to encourage increased flow of coastal and overseas
maritime traffic at Indian ports.
Ports provide an interface between
the ocean transport and land-based transport. In the initial
years, the traffic was being handled mostly at major ports.
However, over the years, non-major ports have also witnessed
growth in traffic. The growth in the cargo handled at
Indian ports has increased from a level of 19.38 million
tonnes (major ports) in 1950-51 to around 457.96 million
tonnes (major and non-major ports) by 2003-04. The share
of traffic at major and non-major ports stood around 345
and 113 million tonnes respectively.
At present the 12 Major Ports (Kolkata/Haldia,
Paradip, Visakhapatnam, Ennore, Chennai, Tuticorin,
New Mangalore, Cochin, Mormugao, Mumbai and Jawaharlal
Nehru and Kandla) handle about 75 % of maritime cargo
of the country. With infusion of new technology and
capacity-building, the congestion at Indian Ports witnessed
in the 1990s has reduced in some places and operational
efficiency has also improved leading to capacities being
marginally ahead of demand. However, with the projected
growth of traffic and growing containerization, there
is need to expand the capacities in the sector through
investment from both public and private sectors.
The policy proposes to adopt a holistic
approach for the development of port sector covering
aspects of integrated development, connectivity, organizational
and institutional arrangements, etc.
Management of existing major ports
and their facilities will be addressed through comprehensive
master plan for each port. Berths will be planned for
future needs only in line with such master plan of the
port concerned.
Since problems faced by individual
ports differ, these would have to be tackled and further
growth planned depending on the specific requirement
and not on a one-size-fits-all policy. In this, substantial
changes that have occurred in the operating and urban
environment around the older ports and the shift of
traffic towards the new emergent ports in the vicinity
would also have to be factored in. (For Example, Mumbai
and Chennai ports have to come to terms with the role
of JNPT and Ennore ports, respectively. Similarly, Kolkata
Dock System will have to reconcile with shift of major
share of its cargo to Haldia Dock System. This would
call for suitably redesigning the future of the old
colonial ports. Large manpower with these old ports
and the real estate have also to be set on a clear course
for rationalization, and development, respectively.
Ports of Kandla, Vizag and Paradip face challenges of
different nature and have to upgrade and modernize their
manpower, management and asset-base, including berths,
equipment and draft. Ports like Cochin, Mormugoa and
Mangalore face limitations of commodity composition
and customer base).
National Sea-Waterways
National Sea-Waterways (on the
lines of National Highways) along the coast would be
developed; this would be funded by the Central Government
and provision made for maintenance of channel depths
at major ports in the first instance.
Minor Ports and Other Issues
In order to avoid unhealthy competition
and to protect the territories of major ports, no new
minor port may be carved out of the territory of a major
port. Similarly, no minor port, or a part thereof will
be converted into a major port without the consent of
the respective State Government. Criteria will be prescribed
for declaration of minor ports as major ports.
Possibility of extending financial
support for the development of minor ports will be explored.
As the policy envisages integrated
development of facilities in the port sector covering
both major and non-major ports, synergies would be developed
for avoiding unhealthy competition.
Development of ports would take into
account the need for ensuring equitable geographical
development, optimal utilization of existing assets
and avoidance of unbalanced growth of individual ports.
Development of new ports and new facilities
within old ports as necessary, will be encouraged.
With a view to optimize the use of
presently available handling equipment at different
ports, inter-port transfer of assets including to minor
ports, would be permitted at book value, as earlier
decided by the Maritime States Development Council.
Mechanism to coordinate the development
between major ports and minor ports will be strengthened.
Maritime States Development Council (MSDC), under the
Chairmanship of the Union Minister for Shipping and
comprising all Ministers dealing with ports in the States
as Members, has been constituted on the basis of an
administrative order. This will be converted into a
statutory advisory body and membership will be expanded
to include representatives from trade and commerce.
Recommendations of the Council, if not implemented,
will be brought back to the Council for its information
and directions.
A centralized cell will be set up
in the Ministry to secure and analyze the data for major
and non-major ports for regular monitoring to serve
as inputs for making policy adjustments, whenever need
arises.
Trans-shipment of Indian cargo taking
place outside the country at present, will be encouraged
to be handled at Indian ports through concerted measures.
These would include increasing the draft available at
Indian Ports, rationalization of port-dues, providing
differential levels of tariff for different sizes of
vessels or for different cargoes to attract mother ships
to berth at Indian ports.
With increasing unitization of
cargoes, either in the form of containers or through ever-increasing
ship size for single commodities, the evacuation and handling
of cargoes have become critical for the port functioning.
Therefore, the resultant connectivity issues will be addressed.
Apart from according priority to rail and road connection
to the ports, the port authorities would be encouraged
to participate in the equity of Special Purpose Vehicles
(SPVs)/Joint Ventures (JVs), formed to provide hinterland
connectivity.
Monopoly situations in areas of port
connectivity, such as is enjoyed by CONCOR or any private
tolled road, will be suitably addressed to enable competition
as well as improvement in quality and efficiency of
such linkages.
Special Purpose Vehicles (SPVs) will
not be allowed to develop into monopolies. The policy
would provide for bringing in additional investors and
competition, as may be warranted.
For ensuring that benefits of
competition are available to users of ports/terminal
facilities, safeguards would be provided to ensure that
terminals which are operated by private parties/sector
set up through SPVs do not become captive facilities
but continue as public utility.
Presently most of the dredging
requirements of Major Ports particularly maintenance dredging
are met by the Dredging Corporation of India. Measures
will be taken to promote Indian dredging industry including
the private sector so as to provide competitive dredging
at the least cost.
Major Ports will also be required to contract out maintenance
dredging for a long term of say three years, which will
encourage private companies to procure dredgers and equipments,
besides enabling ports to obtain competitive rates.
In the medium term of about 5 years,
Major Ports, excepting Kolkata, will be required to
invite tenders for their dredging requirements, instead
of giving the work on nomination basis. Right of first
refusal will be provided to Indian dredging companies
to match the lowest foreign tender, without differentiating
between a public company and a private company, provided
their bids are within a prescribed band. Such preferential
treatment to Indian companies will be provided initially
for a period of five years, so that they can grow and
compete with foreign dredging companies.
Indian private dredging companies
will also be provided conducive fiscal regime to facilitate
their growth. Efforts will be made to get exemption
for first five years from any additional percentage
of tax when they form a joint venture.
Land Policy
The Land Policy for Major Port
Trusts shall ensure that
i. Full powers are delegated to the
ports for leasing of land upto 30 years and that the
lease rent is reasonable.
ii. The land is allotted following
the tender procedure for all fresh allotments excepting
in certain identified areas where it could also be allotted
on nomination basis.
iii. Allotment of land is generally
on upfront premium basis. However, Port shall also have
the flexibility of allotting the land on annual lease
rental basis under certain circumstances.
iv. Ports shall be allowed to renew
lease in favour of sitting occupants even though the
original lessees are no more occupying the premises.
v. Ports shall be allowed to sublet/partially
sublet the leased premises subject to fulfillment of
certain conditions.
vi. Change of use of leased land
would be permitted subject to fulfillment of certain
conditions.
vii. Dispensing with the Minimum Guaranteed
Throughput (MGT) requirement, in those cases which were
finalized in the past, would be allowed subject to fulfillment
of certain conditions.
viii. For renewal of leases, a simple
transparent system will be followed.
ix. Port land will not be given for
religious purposes/activities.
With the increasing demand of
crude oil requirements of Indian oil industry, the infrastructure
facilities at Major Ports of the country need to be
strengthened for handling crude oil. In view of this,
the policy for establishment of SPMs would be facilitative;
it is also proposed that a private SPM need not necessarily
be within either major or non-major port limits.
Private Sector Participation :
Private Sector participation
in ports and the modalities governing the same will
be laid down in clear and comprehensive terms. Cost-plus
approach for laying down tariff by TAMP will be studied
and improved upon to adopt reasonable methods of earning
profit by the private investor. Gradually cost-plus
approach will be replaced by normative approach, starting
at first in container-handling facilities. Monopolies
of any sort will be prevented and competition encouraged.
Since private sector investment is
expected to lead to efficiency and competition, it is
necessary to ensure that these result into tangible
benefits to the users in terms of cost reduction. The
policy would endeavour to bring in both inter-port as
well as intra-port competition so that users have a
choice not only among ports and even operators within
the same port. In case there is only a single terminal/facility
at a particular port, it would have one operator. However,
wherever the second terminal is to be set up at the
same port, the existing terminal operator would be excluded
to ensure competition. If there are a minimum of two
private operators in any port, no restriction would
be placed on the existing operators to bid for the subsequent
terminal, subject to the condition that a single private
operator will not be allowed to operate more than two
terminals at the same port or 1600 metres of quay length.
In the case of container terminals,
minimum quay-length is required to optimize utilization
of the facility. Hence, a quay-length of 800 meters
in a straight line will be considered wherever possible
for one container terminal in future. This however will
not apply to existing terminals and the existing private
terminal operators, while eligible, would have no rightful
claim for any additional quay-length if the present
quay-lengths are lesser.
Concession agreements with private
operators, in future, would include a clause on scope
to handle operations outside the terminal in certain
emergencies such as strikes/breakdowns etc. so that
Trade is not put to inconvenience.
As captive berths of break bulk or
dry bulk cargo for large users could lead to concentration
of control in very limited private foreign or private
domestic companies, this possibility will be discouraged.
As in US, EU, Japan or China, there would be differentiation
between captive terminals and common user terminals,
for development of both types depending upon the needs.
Generally port projects will be awarded
through tender route. However, assets may be leased
out on nomination basis, particularly for captive facilities.
In such cases, revenue sharing will be preferred over
royalty payment. Preference to Indian parties may be
given except in transshipment ports of JNPT, Chennai
and Cochin. In case of lease of existing facilities,
it will be obligatory on the part of the lessee that
surplus workers are taken on the rolls by the successful
bidder; workers’ emoluments with the lessee will
not be lower than the emoluments they were getting in
the port. Ports will be entitled to design a policy
for workers who refuse to exercise the option to move
over to the private terminals, considering that the
work for which they were employed by the Port does not
exist any longer. As regards Minimum Guaranteed Throughput
(MGT), it will be open for the concerned port to decide
whether to lay down MGT or otherwise; however, penalty
for failure to achieve MGT may be made flexible.
Organisational And Institutional Issues
:
Directorate General of Ports
Having regard to the growing importance
of maritime transport and the criticality of port infrastructure,
a separate Directorate General of Ports functioning
under the Ministry of Shipping (on the same lines of
the presently functioning Directorate General of Shipping
looking after issues concerning shipping sector) would
be constituted. Such an authority would be set up after
examining the modalities and the scope of activities
that would be consistent with the provisions in the
Concurrent List of the Constitution. Its mandate would
include policy and its implementation for all Ports
(including non-major ports, private ports/terminals
and fishing ports) in the country.
Port Trusts
The existing organizational structure
for major ports (Port Trusts constituted under the Major
Port Trusts Act) would be improved. Wherever considered
necessary, corporatisation would be effected through
suitable enabling legislative amendments to the Major
Port Trusts Act, 1963.
Since maritime ports are essentially
service providers, the present arrangements for representation
of user interests as trustees in major ports would be
reviewed to enhance the levels of their participation.
The institutional/administrative arrangements
for Ports other than major ports would also be studied
to make them flexible for growth. Corporatisation of
the all ports administered by respective State Govt.
would be pursued so that these ports do not remain as
departmental undertakings of the State Maritime Boards.
All the Maritime States would be required to set up
Maritime Boards to become eligible for any assistance
from the Centre.
As successful functioning of
ports in existing competitive environment would depend
on quick decision-making, adequate powers would be delegated
to the port authorities so that business decisions on
day-to-day matters are taken at the port level, leaving
only policy issues to the Central Govt. for guidance
or decision.
Select ports will be declared as
SEZs (in consultation with the Ministry of Commerce).
The land requirement for SEZ in ports will be suitably
modified. The Deputy Chairmen of such ports will be declared
the Development Commissioners for the notified SEZs. Private
capital will be allowed to develop the infrastructure
for setting up of the SEZ within the port. Efforts will
be made to incorporate these provisions in the SEZ Act.
Supply Chain Management :
As supply chain management has
a direct bearing on the trade and the economy, a suitable
mechanism will be evolved to consider and initiate action
on developments affecting the supply chain management.
In this regard, the Ministry will take proactive steps
so that it is consulted for its views before decisions
are taken such as those concerning :
i) Setting up/closing down of an ICD.
ii) Suspension of service by railways.
iii) Special treatment for perishable
goods/reefers.
iv) Alteration in war risk premium
etc or in marine insurance.
v) Increase in Terminal Handling Charges.
vi) Increase in fees relating to documentation
on transport to or from ports
vii) Freight forwarding/consolidation
and de-consolidation
Electronic Data Interchange (EDI)
:
Electronic Data Interchange (EDI)
will be implemented at all the major ports of India. In
the first phase, the ports, where containers are handled,
would be covered. In the second phase, EDI will be implemented
in all the remaining ports and for all the remaining cargoes
e.g. liquid and dry bulk.
The EDI will cover areas of internal
computerization, port-customs interface, port-bank-port
users interface and port-port users interface.
A uniform and common web based EDI
solution greatly reducing the scope of human interface
in delivery of services will be implemented for the
port sector to ensure that the port users do not have
to visit the Port for transacting routine business.
The system would standardize messages within the country
and also internationally. A repository of information
will also be built and regularly updated for the benefit
of Port users.
Manpower/Industrial Relations And
Training :
Dock Labour Boards
At present Dock Labour Boards are
functioning at Calcutta, Visakhapatnam and Kandla. The
Bombay Dock Labour Board has been superseded. The Dock
Workers {Regulation of Employment (inapplicability to
Major Port Trusts)} Act 1997 provides for merger of
Dock Labour Boards. To provide for interchangeability
of Dock Workers with Port Workers, the existing Dock
Labour Boards will be merged with the respective Port
Trusts.
Productivity Linked Reward for Port
Workers :
The present scheme of payment of
Productivity Linked Reward is based on certain productivity
parameters which are calculated on all India basis.
However, the scheme needs to be made more realistic
so that the reward is actually linked to the productivity.
As the payment is made out of the resources of the Port
Trusts and since each Major Port Trust is an independent
entity, the Productivity Linked Reward would be calculated
on the performance based on productivity parameters
of individual Port Trusts.
Training :
The training of port officers and
employees would be given due importance. There would
be induction/foundation courses for new entrants and
departmental promotees. The curriculum of training programme
would be designed to cover multifarious activities carried
out at a port. Refresher courses would also be conducted
at regular intervals to keep pace with the latest developments.
Successful completion of training courses would be made
mandatory for promotions to higher levels. Training
Institutions will be encouraged to collaborate with
their well reputed counterparts abroad for upgrading
skills of both trainers and trainees.
Recruitment & Promotion :
In order to facilitate mobility of
manpower from one port to the other, appointments at
senior levels will be effected through a composite method
where eligible officers from all Major Ports fulfilling
the criteria would be considered. Recruitment and promotion
rules of such appointments shall also be standardised.
Pension
In order to provide fair and equitable
treatment, pension in the port sector would be on the
lines of pension scheme in the Central Govt.
Incentives
The performance of the port officers/personnel
of the ports would be monitored by the respective ports
regularly and incentives in the form of award/memento
for each year would be awarded.
Stevedoring
The policy on stevedoring will be
laid down. The system by which workers are employed
by stevedores will be liberalized. Rational manning
norms would be developed. Workers will be given incentives
only on actual work done, considering the cargo-handling
equipment used for carrying out the work. Time and motion
studies will be carried out in each port as early as
possible of the work done by the labour with the cargo-handling
equipment for different commodities, and wages will
be worked out based on such studies beginning with next
financial year. The stevedores will be permitted to
bring in additional manpower, in addition to port/dock
workers, from open market, if necessary.
Financial And Fiscal Initiatives :
Private Sector Participation
Guidelines are already in force regarding
private sector participation in port/terminal facilities.
Having regard to the immense potential for development
of facilities at ports on the Indian coastline, private-public
partnerships would be encouraged. The decision making
powers of Port Trusts in financial matters would also
be reviewed from time to time, as warranted.
Tariff
The fear of private investors that
increase in efficiency and productivity might result
in reduction of tariff by TAMP will be addressed; also
increase in efficiency and productivity would be rewarded.
The functioning of TAMP would be strengthened
so that uniform and transparent norms prevail in matters
of tariff fixation as well as in prescription of quality
of service for applicability to port authorities/terminal
operators to ensure that the needs of the users of the
facility and profitability to the facility provider
are met.
Trade would be consulted before any
charges affecting them are implemented at the Ports.
For this purpose, if need be, amendments to the relevant
statutes will be made. However, there will be no control
or regulation on shipping freight. Where shipping lines
do business which extends beyond the sea, that is, on
land in India, they will also be subject to control
like any other agent of any other mode of transport.
Ports play a vital role in the EXIM trade. Delays at the
ports have far reaching implications (both quantifiable
and non-quantifiable) for the importers and exporters.
It is, therefore, felt necessary to put in place a mechanism
whereby the users and trade interests have a bigger role
to play. Shippers’ Councils and Port-Users’
Organizations would need to be strengthened; on the lines
of other federations, it is also possible to promote a
Federation of Indian Maritime Organizations (FIMO). The
policy would ensure that regular meeting with the exporters/importers
at different levels are held besides making the consultations
with the user and trade interests as mandatory before
proposing any increase in the tariff.
International Cooperation:
Sister Ports
Major Ports will be encouraged to enter into sister
port relationship with ports in other countries, particularly
with those ports, which have similar features and with
whom Indian ports share cargoes. Visits by officers
of foreign ports will be allowed and prior clearance
of Ministry of External Affairs/Ministry of Home Affairs
will be obtained only where the foreigners are likely
to stay for longer periods at Indian ports.
Membership of International Organisations
The Ministry of Shipping and the different Major Ports
would take up membership of international organizations
like International Association of Ports and Harbours
(IAPH) & PIANC so as to remain updated with the
latest happenings in the world.
Core competence of resource persons would be developed
in various fields by exposing the selected persons to
developments/events in the international maritime sector.
Security & Safety
ISPS Code : It will be ensured that Indian Ports adhere
to IMO conventions in the area of security/ISPS.
Adequate facilities will be developed to deal with
oil spill management in the ports.
Measures will be taken for wreak removal in the port
areas as and when warranted.
Only those ships which have P&I cover, would be
allowed to enter Indian ports.
Facilities would also be developed for dumping of waste
etc.
Clean and dirty cargo will be handled on separate berths
in the ports. Special facilities would be developed
for handling of hazardous cargo.
Many countries have a single Ministry of Transport,
covering all the modes of transport. Since it would
be difficult in a large country like India, a permanent
forum for ensuring inter-modal coordination would be
set up where the policy-makers of all these modes of
transport come together -- to learn from, and respond
to, the latest transport technology and trends in the
country and abroad.
Fisheries Harbours
At present fisheries as a subject comes under the Ministry
of Agriculture. Since fisheries harbours so notified
are also in the contiguous zone of regular maritime
ports, it would be necessary to ensure that their functioning
do not conflict. The policy for development of fisheries
harbours would also form part of an integrated maritime
policy.
Cruise Shipping
Cruise shipping is emerging the world over as a mode
of tourism . With a long coastline dotted with beautiful
tourist spots and beaches, India will be ideally suited
for development of cruise shipping.
Promotion of cruise shipping will therefore get special
attention. Ports will have the flexibility to offer
concessional rates for promoting cruise shipping. Cruise
terminals would be constructed and all facilities to
promote cruise shipping will be carried out at the ports.
These would be complemented by activities outside the
port premises and would include planning and coordination
with Tourism departments of the Centre and State to
promote ‘fly and cruise’ type of tourism.
The suitably planned cruise tourism itinerary could
also include visits to World Heritage sites in India
through suitably established linkages with other forms
of tourism such as Palace on Wheels, or the Konkan Odyssey.
Immigration and custom procedures will be simplified
to promote cruise tourism to cover as many Indian ports
as possible. Efforts will be made to get the immigration
officers in different ports empowered to give the visa
and stay permits on the spot.
Cruise shipping both foreign and domestic will be encouraged
in a big way to promote tourism with attendant linkages
of development of terminal facilities at ports and also
of ship sails.
India at present is ranked 17th Maritime nation in the
world. The total tonnage under Indian Flag has remained
stagnant since 1996 at around 6 to 7 million GRT. The
importance of Shipping can be gauged from the fact that
the maritime trade is carried on through the shipping
mode. In addition, shipping sector is an important foreign
exchange earner; it also offers great potential for employment
generation both at home and abroad on board and ashore.
The sector needs focused policy support through simplification
of procedures and providing cargo support to promote shipping
and also to derive benefits of 100% FDI permissibility.
Coastal shipping is eco-friendly, cost-effective and fuel
efficient mode of transport. It can gainfully provide
connectivity as well as transportation along the country’s
coast line and also to the islands of Andaman and Nicobar
and Lakshadweep. The low share of cargo carried at present
by coastal shipping (a mere 7%) in our country when contrasted
with the shares in advanced countries accounting for as
much as 30-40% of the total traffic, underscores the potential
of coastal shipping as a viable mode. Since coastal shipping
also has potential for employment generation, the provision
of a favourable policy environment would catalyse growth
and employment.
The policy in the shipping sector aims to expand Indian
tonnage, maximize flow of investments (domestic and foreign)
and assure the emergence of core competent and globally
accepted maritime personnel. The thrust of the policy
would comprise of the following :-
(i) Replacing old vessels and adding new vessels to
the Indian fleet.
(ii) Provision of level playing field to shipping sector
in terms of taxation and creating an environment whereby
share of Indian bottoms in the EXIM trade grows
(iii) Keeping in view the global shortage of about
5000 officers over 10 years, as projected in BIMCO survey,
the country would endeavour to meet the requirements
of trained maritime personnel worldwide and accordingly
strengthen the human resource development component.
(iv) The policy would promote coastal shipping to enable
raising its share in the movement of inland cargo from
7% as of now to around 15% by the year 2025.
To achieve the objectives in this area, it is proposed
to initiate action on issues covering augmentation of
fleet and infrastructure, organizational and statutory
arrangements, fiscal and financial initiatives, interface
with trade interests, manpower training, issues concerning
international co-operation, etc.
Development/Augmentation of Infrastructure
:
Concerted effort would be made for positioning a favourable
environment for expansion of Indian tonnage. A level
playing field to shipping sector in terms of fiscal
treatment would be assured; in addition, institutional
and infrastructure strengthening and facilitating ship
acquisition in both public and private sectors would
guide the policy and programmes.
Priority would be accorded for replacement of old
vessels in a time bound manner and also for acquisition
of new vessels so that Indian fleet increases from the
present level of around 7 million GT to 10 million GT
in the next 3-5 years.
In line with the global experience where the containerized
traffic is increasing, Indian shipping companies will
be encouraged to increase their tonnage of container
ships.
Policy for LNG Shipping will provide a regulatory environment
for participation of Indian companies and transportation
of LNG to India on Indian flag.
Offshore shipping policy will be finalised with a view
to promote Indian tonnage in offshore supply vessels
(OSVs) and also of activities, training and export of
manpower with expertise in offshore shipping.
BBCD is a facilitative method of acquisition of ships
whenever the financing cost is either very high or when
External Commercial Borrowings are difficult. The existing
BBCD policy would be reviewed in respect of issues concerning
flagging of BBCD vessels, manning them, preference of
BBCD vessels vis-à-vis foreign flag vessels in
respect of cargo allocation etc. and would be rationalized.
This together with suitably designed package of fiscal
incentives could facilitate acquisition of additional
tonnage through this route by the new as well as comparatively
smaller investors.
The procedure of registration of vessels would be
simplified and made user-friendly through suitable amendment
of the relevant part of the Merchant Shipping Act.
Keeping in view ever increasing demand for passenger
ships to the A&N and Lakshdweep Islands, additional
ships of this category will be added to the fleet. The
requirements of different ships will be standardised
to make acquisition cost effective and fast.
Since rail and road are already saturated modes of
transport, efforts will be made to promote Coastal Shipping
by creating infrastructure for integrating shipping
with other modes of transport.
Dedicated Terminals for coastal shipping will be constructed
at ports so that coastal ships do not have to wait for
berthing.
Minor ports will be developed with a view to promote
coastal shipping through a centrally sponsored scheme.
The navigational aids will be modernized to facilitate
ship movements in Indian waters. Vessel Traffic System
(VTS) is proposed to be opened in increasing number
in India to meet the needs of growing marine traffic.
Such VTS will be established in eastern and southern
regions and also in the Gulf of Khambhat to cater to
increased navigational needs of marine traffic.
Provision of night navigational aids near the shore
and port boundaries can lead to entry of more and more
ships to the ports. Suitable scheme would be designed
and operationalised for this purpose. In order to have
effective information system along the coast of India,
coastal stations through BSNL or suitable agencies will
be set up to receive messages from ships.
A regional MMD office headed by Principal Officer, MMD
will be opened in eight main maritime States; similarly
district level MMDs would be reorganised to cater to the
needs of maritime constituencies. This would provide for
strengthening the maritime administration in the country.
Full fledged Shipping Master's office at all Major
Ports will be opened so that the seafarers are able
to get CDCs issued timely without having to secure only
from Mumbai as at present.
The strength of ship surveyors will be increased on
a rational and realistic formula so that a minimum of
20% of foreign flag ships calling on Indian ports and
15% of Indian flag ships both foreign going and coastal
are inspected mandatorily.
With a view to India becoming an active member of the
IMO and contributing to the decision making process
at IMO, a permanent representative office in IMO, London
will be established.
Having regard to the tremendous surge in shipping activities
in Indian waters, the risk of marine accidents including
oil slicks has also increased. It is proposed to establish
a Maritime Accident Investigation Bureau to lend transparency
and urgency to the investigating process.
In view of the increased security concerns in Indian
waters, it is proposed to position an uniformed Marine
Police Force; wherever necessary, Maritime Police Stations
will be opened for this purpose for regular presence.
National Shipping Board will be suitably strengthened
and empowered to ensure that it plays a vital role in
development of shipping and also the development of
interface of shipping with exporters, importers and
other national level trade associations/bodies. Areas
on which the recommendations of the Board will be mandatorily
required as an input for policy formulation and those
on which their recommendation would be of advisory nature,
would be identified. The Merchant Shipping Act would
be suitably amended to incorporate this arrangement
and also making provision for the strengthening and
empowerment of the Board.
Since VTSs are planned at various centres, a Vessel
Traffic System Authority of India will be established
as a statutory body to provide necessary regulation
for uniformity and benchmarking to the system.
A clear cut marine insurance policy will be adopted
with attendent legislative provisions, if so required
to facilitate activities relating to maritime insurance
and related activities in the country.
Manpower And Training
The emerging global shortage of qualified shipping personnel
provides immense scope to India since India is a leading
supplier of trained seafarers. In view of this, the concept
of Maritime University will be developed, taking into
account Indian conditions and two such universities –
one on the east coast and the other on the west coast
of India would be established.
As it is essential to build up a pool of maritime experts
in related fields, at least ten or more training slots
would be ensured in internationally reputed institutes
like World Maritime University (WMU) and International
Maritime Law Institute (IMLI). Efforts will be made to
establish parallel campuses and franchises in India in
collaboration with these institutes. Integrated financial
packages from the public/private sector will be made available
to the deserving trainees. Chairs for specific studies
will be established at premier institutions in India (Indian
Institutes of Technology at Kharagpur, Mumbai and Chennai
where subjects related to maritime sector are already
pursued) so that specialized faculties in various subjects
are built up.
Keeping in view the urgent demand of students opting
for seafaring as a career, examination centers will
be opened in important major cities of the country.
Efforts would be made to introduce a regular pension
scheme for seafarers, which would not entail any financial
liability for the Govt. Such a scheme would be prepared
in consultation with the representative bodies of seafarers
and ship-owners. For this purpose, either a separate
pension scheme will be formulated or the present Seamen
Provident Fund Act Scheme under the Seamen Provident
Fund Act will be amended to include pension/annuity
in its mandate.
Aggressive marketing strategy will be pursued for employing
our seafarers abroad. In this context, information modules,
CDs, brochures and documentaries will be developed for
roadshows to market our seafarers on foreign flag ships.
Shipping as a career will be popularized in schools
and fishermen communities. Exhibitions, museums, literature
and paintings relating to shipping activities will be
promoted.
Measures will be put in place for employment of ex-Navy
personnel in Merchant Navy.
In the Shipping and Maritime Training sectors as far
as possible investments from private sector will be
encouraged.
However, for certain activities like establishment
of new MMDs, Maritime University, VTS etc. Gross Budgetary
Support(GBS) will be provided.
The Government has already introduced Tonnage Tax for
the shipping industry for vessels registered under Merchant
Shipping Act, as a measure for ensuring level playing
field for Indian shipping companies vis-à-vis
global shipping companies. The Government would also
address other structural issues such as taxation of
Indian seafarers, service tax, withholding tax, etc.
to ensure growth of tonnage; it would also facilitate
availability of competitive freight rates to the end-user.
All Indian Seafarers employed in foreign going shipping
should be exempt from Income Tax provisions, provided
he remits US$10000 per annum into India.
Income from chartering of vessels including BBCD vessels
will be exempted from Sales Tax (VAT)/royalty payments.
Special dispensation in the shape of special rates
in the ports will be provided for coastal cargoes and
coastal shipping.
Dues will be delinked from those charged for foreign-going
ships. Notwithstanding what is mentioned in the Customs
Act, the voyages on the coastal stretch will be exempted
from payment of lighthouse dues. This will be exempted
even if on the coastal run the ship is carrying containers
or cargo picked up abroad, provided the voyage is from
one Indian port to another.
Duty free bunker will be made available for coastal
vessels as is the case with foreign going vessels in
Indian waters.
Duty free import of spares/stores/equipment related
to coastal vessels will be allowed.
Coastal shipping will be promoted through a reduction
of dues vis-à-vis other categories of ships at
various ports.
There will be no need for conversion under Customs’
Act for Indian foreign-flag vessels to coastal leg run
in order to save time and costs in the interest of exim
trade and coastal shipping.
Coastal Shipping Development Fund with a corpus of
Rs.500 crores will be set up to provide finance on soft
terms for acquisition of coastal vessels.
Interface with Trade Interests
Shipping is a complex industry and is truly international
in character. While the Govt. would not regulate the
commercial aspect of shipping, especially freight, it
would however facilitate emergence of a code of conduct
in the nature of “self-regulation” through
consultations between shipping lines with shippers among
themselves.
The policy of the Govt. would be to ensure that decisions
are taken in a transparent manner and at the same time
striking a balance between the potential conflicting
interests of transport service providers and service
users. For ensuring this, Govt. will pro-actively help
the shippers in organizing themselves for empowerment,
through assistance for research and studies on developments
in international shipping across the world and for providing
greater and regular access to information relating to
developments in shipping, containerization, multi-modal
transport, technologies, documentary requirements etc.
This would facilitate the regional and national Shippers’
Councils to articulate and safeguard the interests of
the exporters/importers as well.
These Shippers’ Councils would be promoted not
only for conducting negotiations with shipping lines
about freight etc. but also for protecting shippers’
specific interests vis-à-vis other Governmental
agencies, regulatory bodies and parastatal institutions
e.g. Ports, Railways, TAMP, Customs, ICDs, CFSs, IWAI,
etc.
Cooperation of UNCTAD and ESCAP would also be sought
in empowering the Shippers Council and fostering greater
cooperation between various Regional and National Councils.
As part of the policy, the Govt. would favour regular
consultations every quarter between all major shipping
lines and the National and Regional Shippers’ Councils
wherein all important issues of mutual interest may
be decided through consultations. Shipping lines not
participating in this consultation process or not honouring
the decisions of this consultation process, could be
identified for suitable follow up action.
All pending IMO conventions will be taken up for scrutiny
and ratified, if required, with consequential updation
of national laws.
Shipping activities will be included under the relevant
provisions of ‘The Territorial Waters Continental
Shelf, EEZ, other Maritime Zones Act, 1976’ so
that consequential benefits are also available to this
Sector. Since the notifications are issued under this
Act, relevant provisions from maritime legislation especially
M.S. Act will be included in such notifications to promote
Indian shipping and to regulate foreign-owned shipping
in EEZ of India.
Section 150 of MS Act will be amended to ensure avoidance
of unnecessary litigation without jeopardizing the rights
of seamen. This would address the present tendency to
approach the courts for appointing a tribunal for workers’
disputes in shipping and seafaring.
Section 21 of MS Act would be reviewed and amended
if necessary, for including the concept of “Joint
Ownership of Ship” with every foreign shipping
line touching Indian shores.
The provisions and scope of the Multi Modal Transport
of Goods Act and Bill of Lading Act will be amended
to meet the aspirations of the sector. MMTG Act would
be reformulated on the lines of FIATA Bill of Lading
which is an internationally accepted instrument.
Admiralty Act of India will be enacted keeping in mind
the recommendations of Law Commission of India and requirements
of the Shipping sector which will free it from colonial
laws.
Bilateral/and Multilateral Maritime agreements with
other countries would be improved upon for safeguarding
and promoting Indian Maritime Interests.
Possibility of having another International Register/Open
Register will be explored to attract more tonnage keeping
in view availability of 100% FDI in the sector. The
M.S. Act will be suitably amended for the purpose.
Particularly Sensitive Sea Areas (PSSA) will be identified
along the coasts of India, with special attention to
the eastern coast and around Andaman & Nicobar and
Lakshadweep Islands keeping in view the necessity to
protect the natural habitat and environment.
Other Issues
Sailing Vessels
Sailing vessels industry in India
is age-old. Despite its potential for providing job
opportunities to a large number of people, it has not
received due attention and priority. A comprehensive
policy package will be put in place which will provide,
inter-alia, the status of industry to this activity
so that financial institutions could advance loans to
them easily; also facilitating carriage of captive cargo
would assure a place for sailing vessels.
Fishing Vessels
Fishing vessels are also a neglected category in terms
of safety of navigation, training and welfare measures,
despite the fact that a large number of semi-skilled
and unskilled people are employed in this industry.
Efforts will be made to widen the spectrum of jobs for
fishermen in merchant navy through suitable training
and education. Laws and regulations covering this Sector
will be made uniform throughout the country in order
to overcome the present difficulties and also to address
issues of safety of navigation, training and welfare
measures for the crew. Efforts would also be made in
consultation with Ministry of Agriculture to ratify
Torremolinos Convention and STCW-F and undertake updation
of national laws accordingly.
Chartering and Cargo Support
Policy of FOB imports by Government Departments and
Public Sector Undertakings and centralized shipping
arrangements through TRANSCHART (Ministry of Shipping)
and cargo support to Indian ships will continue.
Shipbuilding Industry is a highly
competitive business. Globally it is observed to be
generally supported by national policies and subsidies;
without Government support, the growth and sustenance
of shipbuilding industry would be difficult. The geographical
profile of the industry evinces locational changes.
Shipbuilding industries have shifted from Europe to
Japan, Korea and Singapore in 70s and to China in 90s.
(China presently has 58 yards and is in the process
of building the largest yard near Shanghai. It has 497
ships on order now and aims to be the world’s leading
shipbuilding nation by 2015). Since India has comparatively
cheaper labour, policy and regulatory support from the
Government may facilitate a steady growth of shipbuilding
industry in India.
At present, India can build ships upto the size of
only 1,10,000 DWT which is highly inadequate as per
the global shipbuilding standards. The productivity
level of all the Indian shipyards are also low due to
the lack of mechanization. Most of the Indian shipyards
are incurring losses and would face difficulties in
raising funds on their own for capital expenditure to
facilitate improvement of business prospects. Further,
the average size of available drydocks in India is also
small and not technically equipped to handle repair
work of large ocean going ships.
The policy for the shipbuilding and shiprepair industry
would take due note of its status as a valuable foreign
exchange earner, in addition to the potential for employment
generation through backward linkage with ancillary industries.
The policy thrust is aimed towards establishment of
at least two international size shipbuilding yards,
besides modernization of existing public and private
sector shipyards. The average size of existing individual
drydocks in India would also be increased. A complete
package of measures to support the industry would ensure
it to become internationally competitive and for the
country to emerge as a leading shipbuilding/shiprepair
nation by 2025.
Policy Initiatives
The proposed drydocking policy would
encourage modernization/ mechanization and will be made
competitive so that it is able to undertake shiprepair
work of most of the ships calling at vicinity ports.
The policy would encourage foreign direct investment
in shipbuilding and shiprepair activity.
The policy would provide for long term subsidy support
(upto 20-30 years). The existing shipbuilding subsidy
scheme would be reviewed to provide subsidy for construction
of all kinds of vessels, subject to reasonability of
price.
Policy support will be provided to ensure availability
of indigenous steel for all Indian shipyards. Prices
of indigenous steel would be capped so as to make Indian
ship building more competitive.
The proposed policy would encourage ancillary units
to support shiprepairs and ship construction. Without
strong ancillary back up, the shipbuilding and ship
repair will not be able to generate additional employment
and compete with global shipyards.
PSU shipyards will be given freedom to device their
own procedures for procurement and make it comparable
with private sector.
Ship owners would be encouraged to place series orders
for construction of vessels through fiscal incentives
/ enhanced subsidy support on the same design in order
to increase competitiveness of Indian shipyards.
In-house design and research activities
will be promoted by giving budgetary support and fiscal
incentives.
At least two international shipyards would be established,
one on the East Coast and another on the West Coast
of India through public-private participation. This
will strengthen shipbuilding and shiprepair in India.
The new Drydocking policy will encourage creation of
shiprepair units adjacent to the ports to be able to
repair/drydock large sized ships.
Financial and Fiscal Initiatives :
Budgetary support to PSU shipyards will be enhanced
for upgradation/modernization and mechanization. Funds
for VRS will be made available for rationalizing Systems
which would be put in place for benchmarking and increasing
the productivity of PSU shipyards. Measures will be
taken up to increase labour productivity.
Taxation in shipbuilding and shiprepairs activity
including customs and central excise would be brought
on par with EOU units.
Shiprepair and shipbuilding would be kept out of ambit
of service tax, sales tax and VAT etc. as shipyards
compete globally for repair and new construction.
In order to encourage Indian Shiprepair industry,
a 10% surcharge would be imposed on the cost of repairs
of Indian flag ships if the repair is done in foreign
shipyards.
Investment regarding Indian shipyards for R&D
would be given 100% exemption from Corporate Tax subject
to a limit of 10% of the profit for the year.
Capital Goods imported for shipbuilding facilities
would be exempt from customs duty for encouraging facility
augmentation/upgradation/modernization.
As the quality and construction standards are continuously
improving, there is need to make ships more safe, secure
and environment friendly by installation of required
equipment including those recommended by IMO. Exemption
from import duty will be provided for equipments to
be installed on Indian ships made mandatory by the IMO
or International legislation.
FDI to the extent of 100% will be allowed in shiprepair
and shipbuilding etc. with encouragement to private
sector investments.
Shipbuilding and shiprepair industry will be provided
infrastructure status and investments in the would be
made eligible for exemptions in direct taxes for long
periods (20 years).
Suitable incentives will be provided to the shipyards
so that retained profits can be reinvested. This will
encourage investments from the internal generation of
shipyards.
Zero custom duties on import of equipments/machines,
etc. for shipbuilding and shiprepairs investments will
be provided and these activities shall be free from
customs bond. Flexible tax regime for disposal of scrap
and waste generated out of shiprepair and shipbuilding
activities would also be put in place.
Indian Ship-owners will be encouraged to use domestic
facilities for shipbuilding, shiprepairs and drydocks
by fiscal incentives. No tax will be levied on repairs
and replacement of hull, machinery and equipments etc.
for ship-repair at Indian yards. (The definition of
repair would include all types of shiprepair work and
would not be restrictive).
International Cooperation
The Indian Shipyards will be encouraged to import technology
and designs for new construction through joint venture
or technical collaboration.
Other Issues
Ship- Breaking
Ship-Breaking and Ship-Recycling activity, which is
a labour intensive industry will be further encouraged
keeping in view its employment potential and without
compromising on environmental concerns.
It is generally acknowledged that IWT is an eco-friendly,
cost-effective and fuel efficient mode of transport
with huge potential for employment generation. However,
at present the share of IWT in India is
