India strategies tariff migration for Major Ports, Private port terminal operators may get pricing freedom

The government is developing a tariff migration regime to enable pricing freedom for existing private terminal operators at all the major ports for a minimum revenue commitment linked to increments to the wholesale Price Index. This is also done to ensure that the government’s income is not affected if the existing concessionaires migrate to the new tariff regime.

Most of the private terminals at major ports have been functioning under various fiscal regimes since they received their concessions and are also responsible for collectively managing nearly half of the traffic.

Previously, the major ports charged diverse tariffs for customers even within the same port owing to different contract terms with port authorities, regulated by the Tariff Authority for Major Ports (TAMP).

After the TAMP was abolished, the Major Port Authorities Act, 2021 replaced it and granted independence to each major port board to execute and approve terminal rates on their premises. Many major disputes in this regard have been addressed under the Major Ports Adjudicatory Board Rules, 2023.

The new tariff regime, implemented in 2021 (under the government of the Central Govt.) is to establish parity between private-sector ports and government port terminals. Under the current regime, newly leased terminals through public-private partnerships (PPPs) are allowed to fix their rates, subject to a settled payment to the port authority. This flexibility was extended to all future PPP concessionaires, with reduced royalties for transshipment and coastal cargo in new contracts.