How India set course for a greater share in global maritime trade

India’s 11,098km coastline hosts 12 major ports and 217 other than major ports (OMPs). Of the ‘major ports’ listed in the Seventh Schedule, Union List-List I (Entry 27) of the Constitution, 11 were historically port trusts under the Major Port Trusts Act, 1963 (now the Major Port Authorities Act, 2021). OMPs are administered by maritime states and Union territories. The labels “major” and “OMP”, however, do not necessarily connote the relative size or importance. Several OMPs handle more cargo than some major ports.

In the nineties and early 2000s, the first wave of port reforms was initiated in Africa, Asia, and Latin America, with a general belief that privatizing some or all aspects of port operations would address public financing challenges, resolve performance issues, while meeting the surge in domestic and overseas trade. India was no exception, and the privatization of port operations at some major ports and by the state of Gujarat was initiated.

At the request of the Indian government, the World Bank found publicly run major ports underperforming global benchmarks, raising user costs and eroding India’s domestic and international competitiveness. The bank urged a gradual shift to a landlord model-public sector (port trusts), withdrawing from service delivery while private operators run terminals and undertake expansion, modernization and mechanization, prompting the erstwhile ministry of surface transport to issue 1996 Guidelines for Private Sector Participation to develop container terminals and other projects under the BOT (build operate transfer) model.

Acting on this advice, Jawaharlal Nehru Port Trust (JNPT) invited global bids for a 600-metre container terminal on BOT terms. In 1997, a consortium led by P&O Ports (later acquired by DP World) won the concession and formed Nhava Sheva International Container Terminal Pvt. Ltd (NSICT) solely to execute and operate the project, becoming the first BOT transaction among India’s major ports. Over the last 29 years, about 100 BOT port projects have been approved in Indian major ports with investments of about ₹650 billion ($8 billion).

BOT/PPP capacity (including captive berths) has steadily gained share in major ports. In 2015-16, PPP concessionaires at major ports handled 156.2 mt (26%) of 606.5 mt of cargo; by 2024–25, including captive berths, they handled 516.9 mt (60%) of 854.9 MT of cargo. Globally, terminal operators account for roughly two-thirds of container throughput. India’s Maritime India Vision 2030 projects about 85% of major-port cargo will be handled by PPPs and private operators by 2030.

PPPs are formal contracts that share risks and rewards between public authorities and private firms to deliver services. In the last 29 years in the Indian port sector, they have become the principal vehicle for private capital, institutional reform, capacity addition, productivity gains, advanced expertise and technology infusion across development, operations and maintenance.

The PPP framework in Indian ports evolved through iterative learning by both government and industry. In 2000, bidders required port operations track record and strong finances. With few domestic players, eligibility was broadened in 2008 to include construction and operating experience from other sectors. Before PPPs, tariffs at port-trust-run ports were government-approved. After PPP concessions began in 1997, the independent Tariff Authority for Major Ports (TAMP) set ceiling tariffs (cost-plus return on capital employed) until 2005. The tariff formula was periodically adjusted by TAMP based on market conditions. To encourage operating efficiency by the PPP operator, normative costs were determined for each terminal, and the ceiling tariff was based on the normative cost in 2008. As many terminals came up and ports became competitive, the allowable tariff was benchmarked to tariffs in nearby terminals in 2013, until the introduction of a completely market-based tariff after the 2021 Port Authorities Act.

Contract structures also matured. Early concessions confined private investors to specified cargo and required investments in berths and equipment. Frameworks were revised in 2008, 2018, and 2021 to improve bankability, balance market risks more equitably between port authorities and investors, and enhance flexibility. The 2021 model introduced institutional mechanisms to revisit terms for unforeseen events/changes in law, and provides orderly dispute resolution, including conciliation.

To strengthen competitiveness, the Major Port Authorities Act, 2021 replaced the 1963 Act, granting managerial autonomy to major ports and helping them compete with OMPs that historically enjoyed tariff freedom and flexible development terms. With OMPs’ cargo share nearing 50%, the Indian Ports Act, 2025 (replacing the 1908 Act) introduces provisions to level the playing field and align all ports with international standards on security, safety, digitalization, pollution control, and conservancy.

Complementing reforms, the government announced an $8 billion ( ₹69,725 crore) package plus $2.2 billion in domestically funded fleet expansion. The package provides a $2.5 billion Maritime Development Fund (equity for eligible projects), $2.3 billion in shipbuilding financial assistance, and a $2.3 billion shipbuilding development scheme. A new non-bank lender–Sagarmala Finance Corp.–will finance port expansion and newbuilds through debt and project finance. In parallel, India is advancing IMEC, the Eastern Maritime Corridor (EMC) and the Northern Sea Route (NSR), and acquiring select overseas port operating rights. With a major push towards enabling PPPs in ports for enhancing port capacity and efficiency, robust financing for major maritime initiatives and playing a bigger global maritime role, the nation is poised for a great maritime voyage ahead.

Rajiv Jalota is former chairman at Mumbai Port Authority, former chairman Indian Ports Association, former DG Shipping, GoI, former MD, India Ports Global Ltd.