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3 Hindi version of this publication is also available PARLIAMENT OF INDIA RAJYA SABHA DEPARTMENT-RELATED PARLIAMENTARY STANDING COMMITTEE ON TRANSPORT, TOURISM AND CULTURE TWO HUNDRED FORTY SEVENTH REPORT Demands for Grants ( ) of the Ministry of Shipping (Presented to the Rajya Sabha on 17th March, 2017) (Laid on the Table of Lok Sabha on 17th March, 2017) Rajya Sabha Secretariat, New Delhi March, 2017/ Phalguna, 1938 (Saka)

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5 CONTENTS PAGES 1. COMPOSITION OF THE COMMITTEE... (i)-(ii) 2. INTRODUCTION... (iii) 3. ACRONYMS... (iv) 4. REPORT RECOMMENDATIONS/OBSERVATIONS AT A GLANCE MINUTES ANNEXURES

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7 COMPOSITION OF THE COMMITTEE (Constituted on 1st September, 2016) 1. Shri Mukul Roy Chairman RAJYA SABHA 2. Shri Ritabrata Banerjee 3. Dr. K. Chiranjeevi 4. Dr. Prabhakar Kore 5. Shri Kiranmay Nanda 6. Shri Rangasayee Ramakrishna 7. Kumari Selja 8. Shri Rajeev Shukla 9. Shri Narendra Kumar Swain 10. Shri Lal Sinh Vadodia LOK SABHA 11. Shri Subrata Bakshi 12. Shri Ram Charitra Nishad 13. Shri Vinod Chavda 14. Shri Rajeshbhai Naranbhai Chudsama 15. Kumari Arpita Ghosh 16. Shri Rahul Kaswan 17. Shri P. Kumar 18. Shri Harish Chandra Meena 19. Yogi Aditya Nath 20. Shri Kristappa Nimmala 21. Shri Rajesh Pandey 22. Shri Rajesh Ranjan 23. Shri P. Srinivasa Reddy (i)

8 24. Shri Ram Kumar Sharma 25. Shri Prathap Simha 26. Shri Dushyant Singh 27. Shri Kunwar Haribansh Singh 28. Shri Rakesh Singh 29. Shri Shatrughan Sinha 30. Shri Manoj Tiwari 31. Shri K. C. Venugopal SECRETARIAT Shri J. G. Negi, Joint Secretary Shri Swarabji B., Director Shri Arun Kumar, Assistant Director Shrimati Catherine John L., Assistant Director Shri P. P. Raumon, Committee Officer (ii)

9 INTRODUCTION I, the Chairman, Department-related Parliamentary Standing Committee on Transport, Tourism and Culture, having been authorized by the Committee to present on its behalf, do hereby present this Two Hundred Forty Seventh Report on Demands for Grants ( ) of the Ministry of Shipping. 2. The Committee, at its meeting held on 23rd February, 2017 considered the subject and heard the Secretary and other officials of the Ministry of Shipping. 3. The Committee wishes to express its thanks to the officers of Ministry of Shipping for placing before the Committee, the material and information desired in connection with the subject and for clarifying the points raised by the Members. 4. The Committee considered and adopted the Report at its meeting held on the 9th March, NEW DELHI; MUKUL ROY 9 March,, 2017 Chairman, Phalguna 18, 1938 (Saka) Department-related Parliamentary Standing Committee on Transport, Tourism and Culture, Rajya Sabha (iii)

10 ACRONYMS A&N : Andaman and Nicobar ALHW : Andaman and Lakshadweep Harbour Work B E : Budget Estimates CEZ : Coastal Economic Zone CAGR : Compound Annual Growth Rate CIWTC : Central Inland Water Transport Corporation Limited CoS : Committee of Secretaries DCI : Dredging Corporation of India DGLL : Directorate General of Light Houses and Light Ships DWT : Dead Weight Tonnage FY : Financial Year GBS : Gross Budgetary Support HDPEL : Hooghly Dock and Port Engineers Limited ICTT : International Container Trans-shipment Terminal IEBR : Internal and Extra Budgetary Resources IMU : Indian Maritime University IPRCL Indian Port Rail Corporation Limited IWAI : Inland Waterway Authority of India IWT : Inland Water Transport JICA : Japan International Corporation Agency JNPT : Jawaharlal Nehru Port Trust MCuM : Million Cubic Meter MDP : Management Development Programme MGPT : Mormugao Port Trust (iv)

11 MMTPA : Million Metric Tons Per Annum MoU : Memorandum of Understanding MT : Metric Tonne NER : North East Region NWs : National Waterways PPP : Public Private Partnership PSU : Public Sector Undertaking R&D : Research and Development RE : Revised Estimates SCI : Shipping Corporation of India SPV : Special Purpose Vehicle TEU : Twenty Foot Equivalent Unit TAMP : Tariff Authority for Major Ports VGF : Viability Gap Funding VPT : Visakhapatnam Port Trust VoCPT : V.O. Chidambaranar Port Trust (v)

12 REPORT The Ministry of Shipping encompasses within its fold the port and shipping sectors which include major ports, shipbuilding and ship-repair, national water-ways and inland water transport. The Ministry has been entrusted with the responsibility to formulate policies and programmes on these subjects and their implementation. 2. The following subordinate/attached offices, autonomous organizations, societies/associations and public sector undertakings are functioning under the administrative control of the Ministry of Shipping. Directorate General of Shipping, Mumbai (including Minor Ports Survey Organization, Mumbai) Andaman and Lakshadweep Harbour Works, Port Blair Directorate General of Lighthouses and Lightships, Noida Port Trusts at Kolkata, Kochi (Cochin Port Trust), Kandla, Chennai, Mormugao, Mumbai, Nhava Sheva (Jawaharlal Nehru Port Trust), Paradip, Tuticorin (V.O. Chidambaranar Port Trust), Visakhapatnam and New Mangalore Dock Labour Board at Kolkata Inland Waterways Authority of India, Noida Tariff Authority for Major Ports, Mumbai Seafarer's Provident Fund Organization, Mumbai Indian Maritime University Seafarer's Welfare Fund Society National Shipping Board Indian Ports Association Shipping Corporation of India Limited Cochin Shipyard Limited Central Inland Water Transport Corporation Limited Dredging Corporation of India Limited Hooghly Dock and Ports Engineers Limited Kamarajar Port Ltd. Ennore

13 2 Sethusamudram Corporation Limited Sagarmala Development Company Limited Indian Port and Rail Company Limited Indian Port Global Private Limited. 3. Demand No.87 containing the details of budgetary provisions of the Ministry of Shipping for the financial year was scrutinized by the Department-related Parliamentary Standing Committee on Transport, Tourism and Culture in its meeting held on the 23rd February, The Secretary, Ministry of Shipping along with the senior officials explained to the Committee various aspects of the budget and functioning of the Ministry. The Committee examined the budget documents of the Ministry and the replies furnished by the Ministry to the questionnaire. ANALYSIS OF TWELFTH PLAN ALLOCATIONS 4. The outlay for the Ministry during the Twelfth Plan includes ` 6960 crore as Gross Budgetary Support (GBS) out of which ` crore (44%) and ` crore (56%) have been earmarked for Ports and Shipping Sectors respectively and ` crore as Internal and Extra Budgetary Resources (IEBR). 5. The details of the year-wise utilization of Plan funds of the Ministry of Shipping during the Twelfth Plan period are as under: (` in crore) Year BE RE Actual Actual Exp. Actual Exp. as % of BE as % of RE GBS IEBR GBS IEBR GBS IEBR GBS IEBR GBS IEBR * * TOTAL *The Expenditure for the year is up to The Committee notes from the details given by the Ministry of Shipping that the GBS got reduced at the RE stage in the five annual plans. However, the percentage of reduction was less during compared to the previous years.

14 3 7. The Committee observes that the Twelfth Five Year Plan outlay for the Ministry of Shipping development in the country was ` 6960 crore as GBS and ` crore as IEBR. Out of it, the major chunk of allocation (GBS) of ` crore was for development of shipping sector and ` crore for the Ports Sector. From the data provided by the Ministry of Shipping, the total allocations made all these five years was only ` 2306 crore out of which the spending up to 31st January, 2017 is ` crore. The Committee is very disappointed to note that the actual allocation made to Ministry of Shipping is only 32.20% of the outlay (GBS) decided by the Planning Commission. The Committee recommends that the Ministry of Shipping should give due care in utilizing the allocations promptly by completing the targeted projects within the stipulated time. 8. The Committee desires to know the comparison of the targets fixed by the erstwhile Planning Commission during Twelfth plan period for the Ministry of Shipping and the achievements of the targets made by the Ministry at the end of the Twelfth Plan period. The year-wise details and the percentage of achievement, etc. of each of the targets set in the Port and Shipping Sectors may be provided at the time of submission of the Action Taken Replies to this Report. ANALYSIS OF ANNUAL PLAN The Ministry of Shipping informed that BE of ` 1000 crore had got reduced to ` crore at the RE stage during The Sector-wise details of expenditure statement of Plan fund is given below: (` in crores) Sl. No. Scheme BE RE Expenditure % of Exp till wrt RE 1. Ports Sagarmala Lighthouses Shipping & Ship Building Inland Water Transport GROSS TOTAL During the BE allocation of Non-Plan was ` crore which was reduced to ` crore at the RE stage. The expenditure up to 31st December, 2016 as informed by the Ministry of Shipping is ` crore which is 72.76% of the RE. 11. The Secretary, Shipping informed the Committee during deliberations that the following are the key achievements of the Ministry during :

15 4 - JNPT is the first major port to raise Foreign Denominated Loan of US $400 mn - To promote clean fuelled vessels, regulations for LNG vessel and bunkering facilities being formulated by PNG and Shipping regulators. - Highest ever budget allocation for the Ministry. - Inland Waterways Authority of India permitted to raise bonds of ` 1000 crore for the first time. - Highest ever capacity addition of 100 Million Tonnes (MT) in Major Ports expected in (85 MTPA added till January, 2017). - Operating surplus of Major Ports to touch about ` 5,000 crore an increase of 15% over On Ganga (NW-1), construction commenced for Multimodal Terminals at Varanasi and Sahibganj and Navigation Lock at Farakka. - Ministry of Shipping has shifted to e-file mode of working from 1st January, The Committee notes the major achievements made by the Ministry of Shipping during There was a slight cut in both Plan and Non-plan allocations during and the Ports got enhanced allocation during RE The Committee also notes that Port Sector is the only sector which got an enhanced allocation at RE stage. Allocations to all other schemes were reduced at RE Stage. However, the percentage of spending on is only 54.49% of the RE amount of ` crore in the Port projects. The Committee desires to know the reasons why the port sector could not utilize the enhanced amount during The Committee is happy to note that shipping and ship building schemes have spent 92.77% of their allocations. The Lighthouses and Inland Water Transport schemes also have spent a greater portion of their allocations during The Committee recommends that Ministry of Shipping should take a feed back on the reason why certain schemes could not utilize allocated fund and should take necessary corrective measures during the next financial year onwards. 14. The Ministry while replying to a query informed that the following Projects could not achieve required physical targets during FY : The Project of Construction of Subway/flyover in front of the ICTT at CoPT could not be completed for want for clearance from Railways for super structure drawing of Railway span. The work will now be completed by June, 2017 if Railway clearances are received on time. NW-4:- Assessment of land requirement and modification of cross structures is awaited from the Government of Andhra Pradesh and due to the change in policy for development of NWs, development of stretch between Muktyala and Vijaywada has been kept on hold. NW-5:- The progress of Fairways development between Erada and Padnipal is not as per the assigned physical target due to problems relating to agitation of villagers for compensation of their Patta land.

16 5 Jal Marg Vikas:- JMVP is progressing as per schedule, however, land acquisition, wildlife/crz clearance/pib approval of the project are concerns which may affect the progress. 15. The Committee notes that certain projects could not achieve required physical targets during due to various reasons. As regards the construction of flyover in front of ICTT the Committee recommends that the Ministry of Shipping should pursue the matter with the Ministry of Railways to get the necessary clearances at the earliest. As in the case of National Waterway-4 the Government of Andhra Pradesh may be approached for getting the assessment of land requirements and modification of cross structures. The Committee notes that in the case 7 NW-5 and Jal Marg Vikas, the land questions and the necessary clearances should be obtained before commencement of the projects. The IWAI should take up the matter regularly with the concerned Ministry/Departments to get the clearances without delay. 16. The Committee feels that the Ministry of Shipping did not took the necessary ground works before listing the projects and making allocation for them. As a result thereof, the projects are struggling at initial stages itself due to want of required clearances. The Committee recommends that allocation should be made to all projects after getting necessary basic clearances for commencement of the projects. ANNUAL PLAN The Ministry of shipping informed that total outlay of the Ministry for is ` 1773 crore. This includes provision of ` crores for Revenue and ` 384 crores for Capital expenditure. 18. The following is the head-wise and scheme-wise allocation of funds for the year : (` in crore) Revenue Capital Total Secretariat - Economic Services Total - Secretariat-Economic Services Development of Ports Projects of VOCPT Projects of Cochin Port Trust Projects of Chennai Port Trust Projects of Mormugao Port Trust Assistance to other Major Ports Research & Development (Port)

17 Green Port Initiative (Ch. Port) Assistance to ALHW ALHW - Suspense ALHW - Suspense Recoveries Oil Pollution Mitigation Measures Swachchta Action Plan TOTAL : Development of Ports Sagarmala Sagarmala Community Development Fund Studies & Administration Expenditure Sagarmala Development Company Coastal Shpping Berths(3051) Sagarmala Projects (3051) Coastal Shpping Berths(3601) Sagarmala Projects(3601) TOTAL: Sagarmala Ship Building Ship Building Private Sector Shipyard Subsidy TOTAL : Ship Building Other Central Sector Schemes Directorate General of Shipping Ballast Water Management Directorate General of Lighthouses & Lightships Less Receipts/Recoveries Indian Maritime University Contribution to International Maritime Organization

18 Assistance to KoPT - Dredging and Maintenance in Haldia River KoPT-Dredging & Maintenance in Hooghly & Haldia River Web based EDI River Regulatory Measures KoPT Tariff Authority of Major Ports VRS, Statutory Dues, Income Tax Liabilities of HDPEL TOTAL : Other Central Sector Schemes Inland Water Transport Authority of India Grants to Inland Water Transport Authority of India IWAI - Grants in aid - Salaries Aid to Bangladesh IWT - NER TOTAL : IWAI TOTAL : Regarding the projected demand for , Ministry of Shipping informed that they made a total demand of ` crore out of which ` crore has been allocated. A scheme-wise projected demand and actual allocation for is given in Annexure-I. 20. The Secretary, Ministry of Shipping during the deliberations stated that they have completed preparatory project development work related to Ports modernization, Sagarmala, coastal shipping including coastal berths, IWT and ALHW. Among this, the port development and modernization projects can be done from ports' own resources. However, works related to Sagarmala, coastal shipping, IWT and ALHW can be fast-tracked if additional budgetary allocation is provided. 21. The Committee notes that Ministry of Shipping got an allocation (GBS) of ` crore during However, the projected demands of the Ministry was ` crore. According to the Ministry a large number of projects could not be undertaken as sufficient funds are not received for carrying out the works. It can be seen that for some of the projects at Chennai Port

19 8 and Mormugao Port even 10% of the demand was not met. The Ministry asked for ` crore for starting up the work for Sagar Port, ` one lakh was allocated. 22. The Committee also notes that the total demand for various ports projects was ` crore but the allocation is only ` in the revenue head. For Shipping and shipbuilding, the demand was ` crore and the allocation is a mere ` crore. However the IWAI has somehow managed to get comparatively better allocation this year. The Committee recommends that more allocation may be made to Ministry of Shipping for carrying out their various projects proposed to undertake in the financial year The Ministry of Finance may be approached for getting enhanced allocation at RE stage. 23. The Committee recommends that in order to fast-track the works related to Sagarmala, coastal shipping, IWT and ALHW, additional budgetary allocation may be provided to Ministry of Shipping during PORT SECTOR 24. The Ministry of Shipping informed that in RE the total allocation for Port Sector was ` crore out of it, an amount of ` crore was allocated for various Port projects and Ports related schemes under Plan Head. The allocation was mainly given as Government Budgetary Support for Capital Dredging and Connectivity Projects. Out of the ` crore, an amount of ` crore was spent during the year (upto January, 2017) which represents about 98 % of the BE. 25. The allocation (GBS) during is ` crore under Revenue head and ` crore under Capital head. 26. The following table gives the details of amount allocated to ports and their actual requirement during under the revenue head: Name of the Port/ Amount Amount Name of the project Scheme allocated required (In ` crore) (In ` crore) V.O. Chidambaranar Capital Dredging Mormugao Construction of Four Lane Port Connectivity Road Chennai Coastal Road Protection Work Cochin (i) Construction of Subway/Flyover (ii) Rail Connectivity to ICTT- Rail Over Bridge Swacch Bharat Activities under Swacch Bharat Abhiyan (Cochin, Abhiyan Mormugao, Chennai and Kolkata Ports)

20 9 27. The following paragraphs gives the details on the present status of projects mentioned above: (i) The Capital Dredging Project of VoCPT Port - has been completed at a total cost of ` out of which the Government s grant is ` crore. So far ` crore has been released and the balance of ` crore is to be released in towards cost of the Project as committed. (ii) (iii) The Construction of Four Lane Port Connectivity Road of MoPT- This work is in progress and the total port share for the work is ` crore and the Government has already released GBS of ` crore. The work is to be completed by This is part of the obligation of the port towards the project. The Coastal Road Protection Work- Total cost of the project is ` 63 crores. Till date, an amount of ` 30 crores has already been released to the Port (` 15 crores during , ` 10 crores during and ` 5 crores during ). This is part of the obligation of the port towards the project. 80% of the work has already been completed. (iv) (a) Construction of Subway/Flyover- SFC has approved the project relating to construction of a sub way/fly over in front of the International Container Transshipment Terminal (ICTT) Gate at Vallarpadam. The work is in progress. An amount of ` 4 crores has already been released during This is part of the obligation of the port towards the project which is nearing completion. (b) Rail Connectivity to ICTT- Rail Over Bridge. The increased amount of ` crores in the case of Rail connectivity to ICTT at Vallarpadam as approved in the 3rd Revised Cost Estimate (RCE) is required to be released to the Port as funds are immediately needed for ensuring the completion of the project. (v) Under the Swacch Bharat Abhiyan, an amount of ` 8.00 crore is being allocated to four Ports which do not have sufficient funds/financial resources to undertake various activities involved under the Abhiyan. ` 2 crore each is proposed to be allocated to KoPT, MoPT, ChPT and CoPT. 28. The Committee notes that the allocation made to Port Sector is highly insufficient to meet the committed liability of the various ports during In the case of VoCPT, the capital dredging work has already completed and they should release the balance amount of ` crore for which the allocation made is only ` crore. In the case of Chennai Port, their coastal road protection work is completed by 80% and the payment is in midway. They also need 33 crores for completing the work. The Cochin Port has two projects to be carried out which need 52 crore, but the allocation is only 10 crore. The activities under Swachh Bharat Abhiyan got nil allocation this time. The Committee strongly recommends that the Ministry of Finance may take a review of the situation after the completion of first quarter of Financial Year and additional allocation may be made as per their requirement thereafter.

21 10 PORT EFFICIENCY AND PRODUCTIVITY 29. The Ministry of Shipping informed that the efficiency and productivity of Ports have got a fillip as a result of implementation of various benchmarking initiatives to international standards suggested by a benchmarking consultant. Out of the 116 initiatives for various Major Ports, 70 have already been implemented and the remaining would be implemented by With the various measures taken from time to time, the Major Ports have made tremendous progress in terms of various parameters as indicated in the table below: Unit At the beginning of the (on 12th Plan ( ) ) Port Capacity MTPA Cargo Traffic MT Average Turn Around Time Days Average Output per ship Tonnes berthday 30. The following table gives the details of Port Capacity addition and investments done during Twelfth Plan Period:- F.Y. No. of Projects Capacity Investment Awarded (in MTPA) (` in crores) , , , , , TOTAL , The Ministry also informed that the operating surplus in Major Ports which was ` 3,599 crore in grew to ` 4,309 crore in registering a growth of 19.72%. The Major Ports are expected to grow at around 15% in with increase in operating surplus. Cargo Traffic by Major Ports 32. The following table gives the details of comparison of cargo handled by major ports during years and :

22 11 Ports April to January % Variation against prev. year traffic Kolkata Kolkata Dock System Haldia Dock Complex TOTAL: Kolkata Paradip Visakhapatnam Kamarajar (ENNORE) Chennai V.O. Chidambaranar Cochin New Mangalore Mormugao Mumbai JNPT Kandala TOTAL Nine Ports (Paradip, Visakhapatnam, Chennai, V.O. Chidambaranar, Cochin, New Mangalore, Mormugao, Mumbai and Kandla) registered positive growth. - Three Ports viz. Kolkata, Kamarajar and JNPT registered negative growth. - Kamarajar Port Limited with -4.16% decline in growth rate registered the highest negative growth, followed by JNPT (-4.15%) and Kolkata (KDS+HDC) (-2.46%). 33. The Ministry has given the following reasons for decline in traffic:- - Decline in Kamarajar Port growth was due to reduction in Thermal and Steam Coal traffic by -6.68%. - In JNPT, decline was witnessed in other liquids traffic by -5.53% followed by Container by -4.92%.

23 12 - In KDS, decline was due to decrease in Fertilizer Raw Materials by % followed by Coking and Other Coal traffic by %, Fertilizers by %, Other Liquids by % and Other Misc. Cargo by -9.09%. 34. The Ministry of Shipping also informed that to promote coastal transportation of vehicles, major ports are providing 80 per cent discount on port charges for Ro-Ro ships. 35. The Committee notes that the port capacity has been enhanced during and the total capacity among the Major Ports is MTPA at the end of the last plan year. There is a considerable increase of capacity during the Twelfth Plan period. During the period a total of MT has increased. The Committee is optimistic that the port capacity will further increase in the next plan period to accommodate the growth in EXIM trade of India. 36. However, the Committee with a little dismay, has noticed that the cargo growth is not up to the mark as per the figures given in the beginning of the Twelfth Plan period. The Committee notes that the growth of cargo traffic by Major Ports are not commensurating with the port capacity additions. The Committee also notes that nine ports registered positive growth while four ports have been in the red. The Committee recommends that all efforts should be explored to keep the cargo growth in all the ports throughout the year. The ports who have registered negative growth during should workout effective plans to reverse the situation. 37. The Committee notes that the Major Ports in Eastern Peninsula are struggling to make profits and its viability is in question. The coastal shipping is also not being improved at optimal level according to the potential of the country. The Committee observes that the viability of the Major Ports in the Eastern Peninsula can be improved by coastal shipping by providing the facility of Sethusamudram canal. DREDGING: 38. As regards dredging, the Secretary, Ministry of Shipping deposed before the Committee that: "With regard to dredging, I will briefly mention that the Twelfth Plan's objective was that our port should, at least, have 14 metres of draft and wherever feasible, it should be deeper. Sir, I personally feel that except for one or two ports where it is not technically and financially feasible Calcutta is one such example where we cannot have 14 metres of draft we are trying to push this envelope and provide for 18 metres of draft. Vizag outer is there; Kamarajar has already 18 metres; Goa is in the process of going for 18 metres; JNPT is also in the process of tendering for going one-anda-half metres further down. Wherever it is technically and financially feasible, the ports are going for deeper draft, in line with larger shipping". 39. The details of the dredging activities undertaken during is given in the Annexure-II. 40. The Committee is happy to note that except for one or two Major Ports, all the others have maintained 14M draft and they are going further ahead to achieve 18M depth. The Committee

24 13 is optimist that in the coming years these ports could accommodate larger vessels in the berths and thereby increase their cargo throughput. 41. The Committee notes that the capital dredging work of the Mormugao Port has been stalled due to withdrawal of the Environmental clearance given to the projects. The Committee desires to know the decision of the Goa State Pollution Control Board on the matter when it is available. The Committee recommends that the Ministry of Shipping may pursue the matter with the concerned authorities. 42. The Committee notes that since the Kolkata Port being a riverine port, it requires frequent maintenance dredging to keep the desired depth of the draft. The Committee recommends that required budgetary sanctions may be given to Kolkata Port to meet the requirements. CONNECTIVITY TO MAJOR PORTS 43. The Secretary, Ministry of Shipping during deliberations have informed that Indian Port Rail Corporation Ltd. (IPRCL) is set up to take up last mile connectivity projects of Ports. 26 works worth ` 5726 crore were taken up out of that 10 works were awarded and three more works to be awarded during Regarding congestion in the Major Ports, the following information was submitted by the Ministry of Shipping: (i) Jawaharlal Nehru Port: The port was facing an acute traffic congestion problem since By providing dedicated roads for GTI, JNPCT and NSICT Traffic, the issue has been addressed to a large extent. Additional remedial measures action taken by the Port also includes development of Parking facilities, widening of Roads, provision of security guards for controlling the traffic, Gate automation, inter terminal movement of containers, common rail operator for all the terminals, CFS delivery by rail, implementation of e-delivery orders, abolition of manual forms 11 and 13 etc. RFD has been installed to reduced dwell time. With these measures, traffic congestion at the port has eased out. (ii) (iii) Chennai: Chennai Port has taken up connectivity projects for improving the road connectivity to hinterland so as to make evacuation faster. These include Chennai-Ennore Port road connectivity project and elevated four lane link road from Chennai port to Maduravoyal on NH-4. The port is also carrying out works to widen internal port roads to four lane/six lane depending on available space to regulate the movement and also implementing RFID Technology. In addition, roads are planned under Sagarmala project for easy access to the two container terminals. Further, Rail evacuation of cargo (Containers, Cars and dry bulk) will substantially improve after development of port connectivity through the Chennai Beach-Royapuram railway to the 3rd and 4th lines planned by Southern Railways. Mormugao: Port connectivity is adversely affected on account of restrictions imposed by Vasco city administration on plying heavy vehicles to and from city for 6 hrs. per day. This

25 14 is the only access of Port Connectivity. As part of NH-17B connectivity a city by pass road is planned and work order has been issued on The work is expected to be completed by September, Also there is severe congestion in the South Western Railway Network resulting in slow evacuation of rail borne cargo. The South Western Railway Network needs to be doubled to address this problem. The issue has been taken up with Ministry of Railways. (iv) (v) Kolkata Dock System: Kolkata Port is a riverine port and both the dock systems are having Lock Gate constraints for majority of the berths. Another major constraint is that the Port is located in the city area where restrictions on traffic movement are imposed by the Local Authorities. At Kolkata Dock System measures/steps have been taken for removal of import containers from hook point of vessels to Container Freight Station without grounding at the yards, creating of parking lots, repair of major roads and regular interaction with the Local Authorities as well as Stakeholders Haldia Dock Complex (Kolkata Port): Various measures are being taken by the Port to reduce congestion at HDC. These include movement of ships/vessels through Eden Channel, repair of Lock gate at HDC, mechanization of berths etc. Due to Lock Gate constraints, jetties are being planned outside Lock Gate for handling of cargo near Oil jetties, Shalukkhali etc. 45. The new road projects identified for connecting major ports are given in the Annexure-III 46. The Committee notes that 42 road connectivity projects have been undertaken to link all the major ports in the country. The Committee recommends that required financial sanction may be made for timely completion of these projects. The Committee also recommends that more projects which are not yet received environmental clearance may pursue the matter with the Ministry of Environment and Forest. SAGARMALA 47. Sagarmala Programme has been launched with the objective of promoting port-led development in India with focus on modernization of existing ports and development of new ports, creating efficient and effective connectivity between the ports and the hinterland, port-led industrial development and coastal community development. 48. The Ministry of Shipping has informed that projects worth ` 1 Lakh crore are already under various stages of implementation and development. ` crore has been released for 35 projects taken up in FY and FY This includes unique and innovative projects such as Gogha-Dahej RO- Pax Ferry Services Project (` 117 crore sanctioned and ` 58.5 crore released) and RO-RO Services Project at Mandwa (` 57.5 crore sanctioned and ` crore released). 49. The Ministry further stated that Sagarmala Development Company Limited has been incorporated on 31st August, 2016, under the administrative control of Ministry of Shipping for providing equity support to project SPVs and residual projects under Sagarmala. SDC Ltd. was incorporated with an initial authorized capital of ` 1,000 crore, and which may be increased subsequently, if required, and a

26 15 subscribed share capital of ` 90 crore. The entire cost towards authorized capital for the Company with initial subscribed share capital is borne by the Ministry of Shipping. The company will assist the State level/zone level special purpose vehicles (SPVs) and SPVs to be set up by the ports, with equity support for implementation of the projects that they will undertake. 50. The Ministry of Shipping while giving the details of salient features of the Demands for grants stated that there is a provision of ` 600 crore for development of Coastal Economic Zones to be taken up in Phase-I, assistance for development of coastal berths and funding of unique and innovation projects and coastal community development projects under Sagarmala. The provision also includes the budgetary allocation of ` 250 crore for Sagarmala Development Company. The projects identified under Sagarmala Programme are expected to moblilize more than ` 8 lakh crore of infrastructure investment, double the share of domestic waterways in the modal mix, generate logistic cost savings of ` 35,000 to 40,000 crore per annum, boost merchandize exports by USD 110 billion and enable creation of 1 crore new jobs, including 40 lakh direct jobs in the next 10 years. 51. Summary of focus projects under Sagarmala as given by the Ministry of Shipping is: (` in crore) Sl. No. Project Theme FY FY FY Total Project Project Project Project Cost Cost Cost Cost 1 Port Modernisation 39 19, , , ,925 2 Connectivity Enhancement 43 14, , , ,860 3 Port-Linked 1 3, , , ,426 Industrialisation 4 Coastal Community ,373 Development TOTAL 86 37, , , , The Committee notes that the Ministry of Shipping has ambitious future plans for carrying out port development work under Sagarmala Project. The Committee also notes that Sagarmala Development Company Ltd. has been incorporated with an initial authorized capital of ` 1000 crore for monitoring the projects. The Committee desires to know the source of funds with the Ministry to achieve this ambitious target. 53. The Committee also note that there are 199 focus projects targeted to be completed under Sagarmala in the next three financial years with an actual cost of ` 333,534 crore. The Committee desires to know the details of financial plans with the Ministry of Shipping to generate that much resource within three years to meet the required fund for completion of the projects. The

27 16 Committee recommends that financial grants may be provided to projects under Sagarmala as per the requirement. 54. The Committee feels that if the projects under Sagarmala are completed as planned by the Ministry, it will not only boost the economic activities but also create employment opportunities in the country to the greatest extent. SHIPPING SECTOR 55. Shipping industry is one of the most globalised industries operating in a highly competitive business environment that is far more liberalized than most of the other industries and is, thus, intricately linked to the world economy and trade. Shipping plays an important role in the transport sector of India's economy especially in EXIM trade. Indian shipping tonnage which was only 1.92 lakh Gross Tonnage on the eve of independence now stands at million Gross Tonnage as on 30th November, The following table gives the details of allocations made to Shipping Sector during and and the spending during : (BE) (RE) Actual BE GBS IEBR GBS IEBR GBS GBS IEBR The Committee notes that during out of the GBS allocation of ` crore at RE the Ministry of Shipping has spent ` crore so far. Since two more months are there in the financial year, the Committee hopes that they would be able to spend the entire allocation. 58. The Committee notes from Annexure-I, the Ship Building Sector has sought ` 527 crore allocation during however, the actual allocation received is just ` crore. The Committee feels that this is highly insufficient. The Committee recommends that sufficient funds may be allocated to Ship Building Sector. 59. The Ministry of Shipping further informed that the Government has taken the following initiatives to improve the shipping sector. (i) Fiscal incentives to maritime sector: (a) (b) (c) Reduction of service tax incidence on coastal shipping to reduce transportation cost. Reduction of Central Excise duty on capital goods, raw materials and spares used for repair of ocean going vessels to reduce the cost of production and of repair of Ships. Exemption of Customs and Central Excise duty leviable on bunker fuels used in Indian flag vessels carrying a mix of EXIM, empty and domestic containers between two ports in India to reduce coastal container transportation cost.

28 17 (d) (e) (f) Parity in the tax regime of Indian seafarers employed on Indian flag ships vis-a-vis those on foreign flag ships had mandated that the period of stay in India shall be counted as per the entries made in his/her Continuous Discharge Certificate (CDC).This has benefited around 35,000 seafarers presently employed on Indian flag ships. Right of First Refusal (RoFR) for Indian flag vessels and Indian dredgers while working on Indian coast. Indian shipowners have been allowed to buy ships and flag these ships abroad. This policy initiative of "Indian Controlled Tonnage" has facilitated Indian ship-owners to gain access to cheaper funds abroad. (ii) (iii) Cabotage relaxed for specialized vessels such as Ro Ro, Ro-Pax etc. on September 02, 2015 for five years. A Central Sector Scheme to provide financial support to Major Ports/Non Major Ports/State Governments for Construction/up-gradation of Coastal berths for Coastal cargo. (iv) Discount on Port charges for coastal transportation of vehicles through Ro-Ro vessels has been increased from 40% to 80% for two year w.e.f. 20th September, 2016 by Major Ports. (v) Shipbuilding Sector: (a) (b) (c) The Government of India has introduced ` 4000 crores Shipbuilding Financial Assistance Policy for 10 years to encourage domestic shipbuilding. Guidelines for the policy have been framed and uploaded on the website of Ministry. Right of First Refusal to Indian Shipyards While Procuring Vessels by Government and Public Sector for Their Own Use - All government departments or agencies procuring vessels for governmental purposes or for own purposes shall undertake bulk tendering for their vessel related requirements with deliveries starting from and will grant a Right of First Refusal (RoFR) for Indian Shipyards for such order till From 2025 onwards, only Indian-built vessels are to be procured by these agencies for governmental purposes or for own purpose. Similar benefits will be applicable for repair of their vessels. The guidelines for operationalising such revision have been issued by this Ministry. Infrastructure status to shipyards Shipyards will be able to avail flexible structuring of long term project loans, long term funding from Infrastructure Funds at lower rates of interest and for a longer tenure equivalent to the economic life of their assets, relaxed ECB norms, issuance of infrastructure bonds for meeting working capital requirements. 60. The Committee notes the various initiatives taken by the Ministry of Shipping has taken to improve the Shipping and Ship-building Sector of the country.

29 18 DIRECTORATE GENERAL OF LIGHTHOUSE AND LIGHT SHIPS 61. Presently there are 193 lighthouses, one lightship, 23 DGPS stations, 64 RACONS, 21 deep sea lighted Buoys, 05 wreck Making Buoys, 87 physical shore stations, 01 vessel Traffic Service, 04 Lighthouse Tender vessels and 01 National Navtex Chain under the DG Lighthouses and Lightships. 62. The detail of Project undertaken by DGLL during is given below:- Sl. No. Name of the Scheme 1. Establishment of a lighted beacon at Sister Island at A & N Islands 2. Establishment of a lighted beacon at Tries Island at A & N Islands 3. Establishment of new Lighthouses in A&N Islands at Honiph Rock Point in Katchal Harbour 4. Establishment of a new Lighthouse at Maipura (Odissa Coast) 5. Establishment of a major LH with Racon at Lushington Shoal 6. Beautification of Lighthouses (Promotion of Tourism at Lighthouses) 7. Const. of office building complex and staff quarters at Vishakhapatnam 8. Establishment of a new Lighthouse at Shankerpur (West Bengal) 9. Establishment of a new Lighthouse at Valayazhikkal, Cochin 10. Establishment of a new Lighthouse with Racon at Kelshi, Mumbai 11. Establishment of a new Lighthouse at Vembar 12. Establishment of a lighted beacon at Bhet Dwarka (Gujarat) 13. Procurement of Wreck Marking Buoys 14. Improvement of Local Light 15. Recapitalization of DGPS 16. National AIS Network (Phase-II) (Additional capacity building of NAIS) 17. Establishment VTS in A & N, Lakshadweep and Non Major Ports 18. Construction of officers and staff quarters at Gandhidham for VTS-GOK. 19. Improvement of Training Setup, Kolkata 20. Miscellaneous works 21. Improvement of Lighthouses 22. ISO Certification for DGLL 23. Provision of Green Energy at Lighthouses 24. Information Technology (e-governance) 25. Replacement of Asset

30 The Ministry of Shipping has submitted that the following new initiatives are proposed during by DGLL and the project costs will be met by budgetary allocations as indicated under:- (` in crores) Sl. No. Name of Scheme Proposed Project cost would allocation be met during the period 1. Construction Officers and Staff Qtrs. for VTS GoK % at Gandhidham 2. Recapitalization of DGPS % 3. Establishment of new Lighthouse at Shankerpur % 4. Establishment of National Coastal VTS (covering 7517 Km % coast line) 5. Establishment of VTMS at Non Major Port (Karwar) % 64. The Secretary, Ministry of Shipping during the deliberations informed that the DGLL had a record collection of ` 280 crore of light dues during All the Lighthouses were solarised first time. The other achievements are: Navigational Text Messaging System (NAVTEX) set up for safety of mariners and navigation; 8 Lighthouses identified for the development of tourism under PPP mode; and Initiated setting up of National Coastal Vessel Traffic System (NCVTS). 65. The Committee notes that the DGLL has undertaken various projects to establish six new light houses and 3 new lighted beacones at various parts of the country. The Committee also notes the projects to be undertaken during The Committee recommends that all these projects may be completed within the stipulated time-frame. 66. The Committee also notes the achievements for making all the Lighthouses during solarised for the first time and also identifying for development of 8 lighthouses for tourism purposes through PPP mode. COCHIN SHIPYARD LIMITED 67. The Ministry of Shipping informed the Committee during deliberations that performance of Cochin Shipyard Limited continued to be good during the financial year despite the global downturn in the ship building industry. The turnover of the company grew by 7.33% from ` crore to ` crore during The projected turnover for is ` crore. The projected Profit after tax is ` crore.

31 The performance of the Company for FY based on the unaudited figures is as follows: (Rupees in crore) Performance Parameters Projected upto Dec.' Turnover Profit Before Tax (PBT) Profit After Tax (PAT) The Secretary, Ministry of Shipping informed that the following are the key achievements of Cochin Shipyard Limited during : New Dry Dock at a cost of ` 1799 crore sanctioned; International Ship Repair facility with ship-lift at a cost of ` 970 crore sanctioned; and Initiated the process of issue of IPO to raise ` 1000 to 1500 crore additional funds for the key infrastructure projects. 70. The Ministry of Shipping while replying to a query informed that the main problems before the Ship Building Industry are as under:- (i) (ii) (iii) (iv) (v) The growth outlook in Shipbuilding Industry worldwide has been dismal in recent years with the downtrend continuing in the past year as well. This has taken a toll on the Ship building sector in India with low order book positions leading to their inability to service the high debts. Compared to shipbuilding counter parts in other Asian countries, the shipyards in India are low on sophistication. Yards need to automate and modernize as well. Shipyards are also low on Capacity in comparison to other yards in Asia. However, the yards are inhibited from going for massive capacity expansion, modernization and automation due to lack of availability of dedicated low cost funds to cater to the special needs of this sector. The present financing available are high on interest and does not suit the ship building industry's special requirements. Shipbuilding and Ship repairs are specialized activities requiring different skill set and there is dearth of manpower with the required skill set. Ship building in India is hampered by lack of special financing schemes in the financial market for ship owners. The Shipbuilding industry in India needs the support of the Government on the taxation front. Some of the issues are as under:- (a) The capital expansion in shipbuilding is inhibited by imposition of customs duty on the import of Capital goods. The customs duty element adds to the cost of the capital projects as major part of the projects involve imports.

32 21 (b) (c) The Ship building industry is taxed at the corporate income tax rate of 30%. The industry needs a lower rate of corporate tax so that it can have surplus internal accruals to finance its expansion plans in the absence availability of dedicated cheap funds. The shipping industry has been extended the tonnage tax provisions under income tax to make the shipping industry competitive. Similarly Ship building industry also requires a lower rate of income tax to make it more competitive. 71. The policy initiatives undertaken by the Government to revive the ship building industry are as under:- A. Tax initiatives (i) (ii) (iii) (iv) (v) The Government has exempted the manufacture of ships completely from excise duty. The industry is subjected to nil rate of excise duty. The indigenous procurement of goods for use in the manufacture of ships has been exempted completely from excise duty. The indigenous procurement of goods for use in the repair of vessels/ships has been exempted completely from excise duty. The Custom Duties on import of goods for use in the manufacture of ships has been exempted by the Government. The customs duty on import of goods including capital goods for use in repair of the vessels and ships has been completely exempted. B. In addition to the above, the Government has taken the following measures also: (i) (ii) (iii) Government has come out with a policy to grant financial support upto 20% on the contract price or the fair value of the ships to the Ship building industry over a period of ten years with a budgetary support of ` 4,000 crores. This has been initiative to especially counter cost disadvantages of the Indian Ship Industry. The Government has also proposed to introduce the Right to First Refusal for Indian shipyards for government purchases. Ship building and Ship repair industry has been granted the Infrastructure status by the Government. This should enable the industry to sources funds from the Indian and international market. 72. The Committee is happy to note that the Cochin Shipyard has been strong in financial performance during the current financial year. The Committee hopes that the targets will be attained at the end of the Financial Year.