Corporatization of Ports

At present, all major ports except Ennore are run by the Port Trusts under the Major Port Trusts Act, 1963. Ennore, which opened in 2001, is run as a company under India’s Companies Act. The concrete proposal to corporatize ports and bring them under the purview of the Companies Act, 1956, first came up in 2001, when the Ennore port was set up as a corporate entity. A Bill to amend the Major Port Trust (MPT) Act, 1963, was introduced in the Lok Sabha in the same year. The Bill, however, lapsed with the dissolution of Parliament.

The plan also failed because some 54,000 employees and their unions were opposed to the move. Workers unions argue that the Major Port Trusts Act gave enough autonomy to the ports, but due to interference from the government, these ports cannot function independently. The real reason for their opposition could be concern that once corporatized, they would lose board seats and, thereby, bargaining clout with the port management.

Port as a Corporate versus Post under Trust

The process of corporatization means that there is a change in legal structure. Its should not be confused with privatization or disinvestment. The ownership prior to and after the corporatization remains with the Government. Thus, no major impact can be expected by mere change in the legal structure.

  • Under the Major Port Trusts Act of 1963, the ports trusts are managed by the Boards of Trustees. There is not much difference after their corporatization. However, corporatization is seen as a major step towards facilitating liberalisation and subsequent privatization of Ports. The current format has operational restrictions and administrative controls for government. It is said that control factor caused hindrance in the growth of the ports.

What are expected outcomes?

  • Functional Autonomy
  • Increased Productivity and Efficiency
  • Quicker and Timely Decision Making
  • Accountability of Management.

The corporatized ports which do not fall under the purview of Major Port Trusts Act of 1963 are exempted from regulation by the Tariff Authority for Major Ports (TAMP) and are free to fix their own tariff.

Can it be a Game Changer?

Corporatization itself is no panacea for all problems of the ports sector. Even as a corporate Port, a port is subject to all the regulations and procedural restrictions as a government entity. Once becoming the government owned corporate, these ports would be required to compete in the market with private enterprise in every aspect of their commercial activities. Thus, corporatization by itself cannot be a game changer for ports development. Controlling bureaucracies severely limit performance of public enterprise managements. Unless this realisation is achieved and the situation remedied, mere structural changes will have little impact and in fact would undermine such policy initiatives.