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It's time for action now, they say. The sector has held promise in attracting investments, both domestic and foreign. But clearances, infrastructure and other bottlenecks continue to slow the pace of implementation down. These interviews were conducted before the Ministry of Shipping announced that it would phase out TAMP regulation on tariffs.
What are the major issues hampering private investments in ports sector?
There is no doubt that major investments will have to be made to augment the port handling capacity and way forward is private investments. However, the pace of investments is not good enough. Some of the issues which are seen to hamper investments in the port sector are:
There are three broad areas of concern hindering the investment decision by private sectors in port infrastructure through public-private partnership (PPP) route, ie, tariff regulation in major ports, project clearances process in India and poor hinterland connectivity.
While the economic slowdown for the past few years has been the biggest dampener, the investors have been awaiting certain key policy decisions by the government, pertaining to tariff deregulation, land allotment policy, amendments to the MCA etc. It is also seen that there is a gradual but substantial capacity build-up all around the country's coast. Hence, operators have become cautious before committing any massive investment.
Why are foreign players not taking major investment route to Indian ports sector?
Although they are interested in port projects in India, foreign players have the same concerns [as domestic ones] with regards to issues mentioned earlier and impacting their decision to invest in Indian port sector.
Foreign players have a choice of either going in for a greenfield project in the non-major port sector or participate in the tenders of the major ports. Either of the investment has its pros and cons. While the non-major ports offer a relatively 'free-hand', one has to study the marketability of the port. Developing terminals in a major port, though a relatively 'safe' route, it is bound by many rules and regulations of the central government.
Will Maritime Agenda 2020 be able to attract private investment in coming years?
One can only hope that the Maritime Agenda 2020 will be able to attract private investments. However, a lot depends on removing obstacles and fast-tracking of projects which will help to attract private investments.
The future entirely depends upon clearing the clouds of uncertainty in major port regulations. The evolving regulatory environment thus presents quite a few challenges and risks for the industry participants and would be a key event risk from industry growth perspective. The growth in major ports will greatly depend on the regulatory framework. However, there is immense scope in non-major ports. Unless and until port policies are modified and made investor-friendly, the situation will remain the same.
Attracting private investment is incumbent upon offering investor-friendly policies. If the government delivers what it has promised, it will help restore investor confidence which would in turn attract fresh investment and capacity development as envisaged in the Maritime Agenda 2020 could happen. Of course, it is essential that the economy is also back on rails sooner.
Existing private players are not satisfied with the current stringent rules and regulations. What will be the way forward? How will India be able to support port capacity utilisation without private sector investment?
It is absolutely true that private players are not satisfied with the current stringent rules and regulations. The current policy tends to tie down the investor. There should be an exit clause for BOT agreement which will also help in more availability of funds for future investments. The capacity utilisation can be supported only with private sector investment which will be able to bring in best international practices.
All agree that the projected investments in the port sector should come predominantly from the private sector through PPP model. There is very limited scope of investments without private sector involvement in the current scenario.
The following steps can be taken to make PPP framework in ports to be more viable:
Government has been announcing about making the investor climate favourable, yet action is to be seen on many fronts. At the same time, the PPP route at least for development of commercial infrastructure like ports has proved to be beneficial. So the only way forward is to relax the stringent rules and regulations without losing control.