The Maritime India Vision 2047, released by the ministry, proposed that port tariffs not be less than the operating cost per tonne of the asset, a suggestion which, if implemented, could have ramifications for private sector port operators in the country.
Regulatory caps to bring in these curbs need to be implemented within the next two calendar years, the vision document said.
Major ports are under the control of the Centre while the non-major ones are administered by the states.
Ports under the Centre frame their own scale of rates, adhering to the tariff guidelines issued by the government. But PPP Concessionaires in non-major ports are not under any tariff regime. This is an anomaly as they have the flexibility to charge much lower rates to attract cargo of other competing ports, mostly major ports, “creating a risk of predatory pricing”, the vision document said.
To address this issue, the Centre decided to call a meeting of all state maritime boards to assess the feasibility of putting a lower threshold for scale of rates, a government official said. After these discussions, the state maritime boards will issue directives to all non-major ports, restricting them from pricing their tariffs lower than the operating cost per tonne.This will cover the PPP concessionaires which have been in operation for seven years to 10 years or are dominant players in the port sector.
“There will also be a cap on number of years (say, one to three years) for the new entrant in a particular port to have reduced pricing to attract trade subject to compliance of the provisions of Competition Commission Act and specific provisions of the Concession Agreement in this regard,” said the vision document.
M&A in focus
Besides regulating tariffs, the vision document also focused on restricting mergers and acquisitions that lead to a dominant position in the maritime sector. It recommended restrictions on mergers and acquisitions that lead to 50% or above market share in the sector by “a particular group of company or enterprise”.
The state maritime boards will be directed to issue regulations to prevent such consolidation and the Competition Commission of India will oversee any deals that could breach competition laws, it said.
