Strengthening India's Port Sector With The Indian Ports Act, 2025

The Indian Ports Act, 2025 (“2025 Act”), passed by both Houses of Parliament will shortly be notified as being in force. The 2025 Act marks a significant reform in India's maritime legislation, replacing the pre-independence Indian Ports Act, 1908 (“1908 Act”). The 2025 Act aims to: (a) consolidate the law relating to ports; (b) promote integrated port development;(c) facilitate ease of doing business; (d) ensure the optimum utilisation of India's coastline; (e) create an institutional mechanism to effectively administer, control and manage major ports and non-major ports; (f) provide for the management of pollution, disaster, emergencies, security, safety, navigation, and data at ports; (g) ensure compliance with India's obligations under international instruments to which it is a party, (h) take measures for the conservation of ports; and (i) provide for adjudicatory mechanisms for the redressal of port-related disputes.

Salient features

1. Establishment of the Maritime State Development Council (“Council”): The 2025 Act provides for the formation of a Council by the Central Government. The Council provides recommendations to the Central Government and the State Government on various regulatory and operational matters such as: (a) revisions required in the existing legal framework; (b) strategies to foster growth of the port sector; and (c) requirement of building port connectivity infrastructure. Furthermore, the Council issues guidelines for (a) data collection, storage and submission of information in relation to the ports to the Council; (b) dissemination of port-related information to the public; and (iii) ensuring transparency of port tariff.
   
   Additionally, the 2025 Act empowers the Council to advise the Central Government on formulating the national perspective plan for meeting the needs of maritime trade and identifying priority infrastructure projects. The 2025 Act provides that the Central Government, State Governments and the authority “shall endeavour to adhere” to the national perspective plan and the Council's guidelines. The language suggests that it is not binding, but that adherence is only on a best effort basis. Hence, it is unclear under what circumstances they can be deviated from, and what effect it will have. Furthermore, the 2025 Act does not expressly mention whether: (a) the regulations issued by the Council; and (b) the recommendations of the Council to the Central Government and the State Government will be binding or not.
   
   
2. Establishment of the State maritime board: The Major Port Trust Act, 1963 (superseded by the Major Port Authorities Act, 2021) recognises the Board of Major Port Authority as the statutory body which will be responsible for overseeing the development and operation of major ports. However, the 1908 Act did not provide an institutional framework for ports other than major ports. Some states (for example, Gujarat, Maharashtra, Tamil Nadu and Andhra Pradesh etc.,) have created State maritime boards by statute under the respective State legislations. However, other States still run ports through government departments. The 2025 Act provides recognition to the State maritime boards and the departments established by the respective State Governments under the applicable State legislations. Furthermore, the 2025 Act allows State Governments up to 6 (six) months from the date of commencement of the 2025 Act to establish a board by notification, where one is not already in place.
   
   The functions of the respective State maritime boards in relation to ports other than major ports include: (a) formulating development plans; (b) promoting the use and improvement of existing ports; (c) exercising supervision and control over all port works, licensing functions in respect of infrastructure; and (d) developing new ports, subject to security clearance in accordance with the Central Government guidelines.
   
   
3. Establishment of the dispute resolution committee: The 2025 Act envisages time-bound resolution of disputes between ports other than major ports, concessionaires, port users and port service providers by a dispute resolution committee that is required to be constituted by the State Governments. However, the law specifically exempts from the jurisdiction of the committee disputes that are, pursuant to written agreement of the parties, to be resolved by arbitration or any other dispute resolution mechanisms as provided under the concession agreement, licence, permit, or authorisation.
   
   While this exemption appears favourable, it may result in arbitration being left out of the concession agreements, thereby meaning that disputes will inevitably end up being adjudicated by the dispute resolution committee.
   
   
4. Change in control of the port: The 2025 Act mandates that any port undergoing a change in substantial ownership or effective control must obtain prior clearance from the Central Government or a person authorised by the Central Government. However, the provisions do not provide clarity on what constitutes a change in substantial ownership or effective control.
   
   Moreover, the 2025 Act provisions do not indicate whether the requirement of prior clearance from the Central Government is intended to supersede the equity lock-in restrictions and approval process. These restrictions and processes are already contained in concession agreements entered into by State Governments for ports other than major ports.
   
   Limited clarity on mega ports: The 2025 Act introduces the concept of ‘mega ports', whereby any port (major or non-major) may be notified as a ‘mega port' by the Central Government. Notably, the 2025 Act does not specify what constitutes a ‘mega port', but merely provides that the Central Government may, in consultation with the State Government, by notification, specify the criteria for classification of a port as mega port. It does not specify the consequences of a port being classified as a ‘mega port'.

Conclusion

The 2025 Act is a significant shift from the 1908 Act as it aims to create a conducive environment for developing and modernising India's port sector. Furthermore, it addresses key operational and regulatory aspects in relation to the development, operation and maintenance of the ports. It is expected that the Central Government will soon issue suitable notifications to clarify the scope and extent of certain of the provisions, which will bring in necessary clarity and certainty.

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