Indian Ports Act, 2025: A Paradigm Shift in Port Regulation and Development
India is positioned along the world’s busiest shipping routes and has witnessed expansion in the number of operational ports as well as the overall traffic being handled at ports. With India’s importance increasing on the global stage, its maritime sector emerges as a linchpin for commerce, connectivity, and international cooperation. The ports industry over the years has played a crucial role in India’s economy. The Indian government has introduced multiple initiatives, including the ‘Maritime India Vision 2030’ to position India as a global maritime hub.
According to the Annual Report 2024-2025 released by the Ministry of Shipping, approximately 95% of the country’s trade by volume and 68% by value is moved through maritime routes. Specifically, during 2023-2024, major1 and non-major ports in India handled a total cargo throughput of around 1540.34 million metric tonnes. India’s port sector is projected to grow at a compound annual growth rate of 2.4%, reaching an estimated throughput of 2,500 to 3,500 million tonnes by 2028.
To meet the evolving needs of the maritime sector, the Indian government has recently enacted five key legislations, namely, the Indian Ports Act, 2025 (“Ports Act”), the Merchant Shipping Act, 2025, the Coastal Shipping Act, 2025, the Carriage of Goods by Sea Act, 2025, and the Bills of Lading Act, 2025. These statutes replace century-old laws with modern, streamlined legal frameworks. This note focuses specifically on the Ports Act.
Since the enactment of the Indian Ports Act, 1908 (“1908 Act”), there have been significant changes in both the commercial operations of ports and the international norms governing ports necessitating updates to the domestic legal regime of ports. In light of this, the Ports Act was enacted with the aim of facilitating ease of business, promoting sustainable port development and establishing an appropriate governance framework. The Ports Act is expected to contribute significantly towards strategic nation-building objectives.
SCOPE OF APPLICABILITY
India has a total of 14 Central Government owned major ports and approximately 217 non-major ports which are generally managed by and under the control of the respective state maritime boards (“SMBs”) or State Governments, where SMBs have not been established.2
The Ports Act applies not only to all ports regulated under the 1908 Act but also to any part of the navigable rivers3 and channels leading to such ports which the appropriate Government4 may notify,5 all vessels within port limits, and all aircrafts using any water area of a port. The regulatory and jurisdictional reach of the port authorities now extends to crucial access navigable rivers and channels explicitly bringing all vessels and even aircrafts using water area of ports under a single, unified legal framework.
The Ports Act also expands the Central and State Government’s power to notify a new port or to alter existing port limits. Notably, the appropriate Government can declare a port or any part of it as non-operational if the port has remained inactive for ten consecutive years, in the interest of national security, or for any other reason it deems fit. However, the Ports Act does not set out a detailed framework for protecting the interests of stakeholders whose assets and contractual rights may be affected when a port is declared non-operational. Pertinently, the Ports Act does not provide clarity as regards governance regime of port assets that have been declared non-operational, quantum of compensation payments to be disbursed to port concessionaires, treatment of historical liabilities associated with the port (if any), whether ongoing contracts in relation to the port will be automatically terminated and criteria for re-classification of the port as an operational one thereby creating significant risks and uncertainty for investors, operators, and port concessionaires.
MEGA PORTS
The Ports Act now introduces a new category called ‘mega ports’ under the umbrella status of the major or non-major ports. While the Central Government retains the power to notify any major port as a mega port, for notification of any non-major port the Central Government is required to consult the State Government. The development of mega ports aims to establish India as a dominant player in global trade, capable of handling of large volumes of international cargo. However, the success of mega ports will depend heavily on the classification criteria, governance regime and operational frameworks to be adopted by the Central / State government.
GOVERNANCE
The Ports Act establishes a two-tiered regulatory structure for port governance, comprising bodies at both Central and State levels.
The Ports Act recognizes the Maritime State Development Council (“MSDC”), established in 1997, as a statutory body responsible for high-level policy recommendations. The MSDC is chaired by the Union Minister for Ports, Shipping, and Waterways and includes representatives from the ministry of ports of all coastal states, the Indian Navy, and the Indian Coast Guard. Its primary functions include advising the Central Government on the formulation of the National Perspective Plan, enhancing port competition and efficiency, improving connectivity, and issuing guidelines for data transparency. However, the Ports Act does not specify whether the MSDC’s recommendations are legally binding, which could lead to inconsistent implementation.
At the state level, the Ports Act recognizes existing SMBs in states like Maharashtra, Tamil Nadu, and Gujarat, among others and provides that states without such bodies may establish one within six months of the notification of the Ports Act. Under the Ports Act, SMBs have been vested with the authority to fix tariffs and are to operate as distinct legal entities with legal capacity to hold/dispose property and enter into contracts. SMBs are also responsible for regulation, administration, development, and planning of non-major ports as a whole.
TARIFFS
One of the primary challenges earlier faced by major ports was the regulatory oversight on tariff imposed by the Tariff Authority for Major Ports (the “TAMP”). The TAMP had the statutory authority to regulate the rates and charges imposed by major ports, thereby subjecting them to price controls, unlike non-major ports that could set and charge market rates as typically fixed by the relevant SMBs. With the introduction of the Major Ports Authorities Act, 2021, the Board of the Major Port Authority (for each major port) has been authorized to frame its own scale of rates in accordance with market conditions, substituting the earlier TAMP regime.
Building on the provisions of the Major Ports Act, 2021, the Ports Act formally recognizes that tariffs for major ports are required to be determined either by the Board of the Major Port Authority or by the board of directors if the port operates as a company. Conversely, tariffs for non-major ports fall under the purview of SMBs or its authorized concessionaires. Notably, the Ports Act refrains from stipulating an overarching framework for tariff determination or prescribing specific timelines for completion of such tariff-setting exercises, providing discretion to the relevant port authorities.
To ensure market transparency and predictability, all tariffs must be published electronically at least 30 days prior to their implementation. Further, the MSDC has been empowered to issue guidelines concerning port tariff transparency including their constituent components. While MSDC’s guidelines are non-binding in nature, they are likely to play an instrumental role in ensuring transparency and consistency in the tariff-setting exercise across ports.
Notably, the appropriate Government has power in special cases to recommend a port authority to remit the whole or any portion of the fees or other charges due or payable under the Ports Act. Given the wide ambit of discretion available with the Central and State Governments under the Ports Act to interfere with the tariff setting exercise of port authorities, concerns have been raised by stakeholders with respect to sanctity of the process. Overall, it remains to be seen whether the tariff setting mechanism across major and non-major ports as envisaged under the Ports Act will in fact usher in a predictable, transparent and non-ambiguous port tariff regime.
CHANGE IN CONTROL
The Ports Act introduces a crucial compliance requirement by mandating prior clearance from the Central Government, or its authorized person for any port undergoing a change in ‘substantial ownership’ or ‘effective control’. This provision introduces a high-level regulatory oversight mechanism for fundamental changes in port governance. However, the Ports Act itself does not furnish detailed definitions for the terms ‘substantial ownership’ and ‘effective control’. Prescribing clear, unambiguous definitions of these terms as well as incorporating a time bound framework for disposal of applications for grant of these clearances will be crucial to attract greater private sector participation in the ports sector.
DISPUTE RESOLUTION
State Governments are required to constitute a dispute resolution committee (“DRC”), comprising a minimum of three members. The DRC is vested with the jurisdiction to adjudicate disputes arising between non-major ports, concessionaires, users, and service providers within the respective state, unless the parties have mutually opted for arbitration or another alternative dispute resolution mechanism forming part of the concession agreement, license, permit or authorization. The Ports Act explicitly bars civil courts from entertaining port-related disputes that fall within the DRC’s purview. Given that the DRC will be comprised of members appointed by the State Government with no representation from independent / neutral members, the dispute resolution mechanism as contemplated under the Ports Act falls short of inspiring confidence of private stakeholders. The Ports Act is also currently silent on the threshold criteria that a person will need to adhere to be eligible for appointment to the DRC, which further erodes the credibility of the DRC.
Further, it may be noted that while the Ports Act permits parties to opt for arbitration / alternative dispute resolution mechanism which form part of the concession agreement, permit or authorization, it is unclear whether parties can opt for arbitration in case of disputes arising in the ports sector which are independent of concession agreements, permits and authorizations.
ENVIRONMENTAL OBLIGATIONS
The 1908 Act primarily focused on regulating discharge of ballast water, oil, rubbish etc., harmful to navigation but did not incorporate international environmental standards. In contrast, the Ports Act adopts an environmental compliance framework that is in alignment with international standards established under the MARPOL Convention (International Convention for the Prevention of Pollution from Ships, 1973) and the Ballast Water Management Convention (International Convention for the Control and Management of Ships’ Ballast Water and Sediments, 2004).
Every port is required to prepare and implement a comprehensive ‘Port Waste Reception and Handling Plan’ which must be approved by the Central Government. Ports must provide adequate reception facilities for vessel-generated waste in accordance with these above international conventions and may levy charges for the use of such facilities. The Ports Act also allows for flexibility by clarifying that ‘adequate’ is considered by taking into account the operational needs of the port users, its size and geographical location and the types of vessels calling. However, where a port does not meet these standards, the Central Government may direct the port to establish or enhance such facilities. The Central Government also holds the authority to audit any port to assess the adequacy of its waste reception systems and pollution containment equipment.
To enhance transparency, every port must electronically upload key records, including advance waste notices submitted by ship masters, waste delivery receipts issued to vessels, requests from vessels to avail reception facilities, and any additional information as may be prescribed by the Central Government. Furthermore, all ports must promptly report any incident that causes, or is likely to cause, pollution in coastal waters or related interests. Where the Central Government determines that such a pollution threat is imminent, it may direct the concerned port to take such preventive or containment measures as it deems necessary.
Lastly, every port is also required to frame an ‘Emergency Preparedness and Response Plan’ for the purposes of promoting safety, security, disaster management and abating the frequency polluting incidents. This plan must be submitted to the Central Government for its prior approval in such manner as the Central Government may direct in consultation with the State Government. Additionally, the Ports Act empowers the Central Government to establish a national emergency response mechanism.
PENALTIES
The penalty regime under the 1908 Act encompassed large number of criminal offences with penalties including fines and imprisonment, all adjudicated through the formal court system before a magistrate. In contrast, there are two distinct enforcement regimes under the Ports Act. First, the formal court system for serious offences provided under Schedule 1 of the Ports Act that will be adjudicated by a judicial magistrate of the first class6 and can result in both substantial fines and imprisonment. Second, swift administrative process for operational lapses provided under Schedule 2 of the Ports Act that will be handled directly by the port’s conservator.7 Offences set out in Schedule 2 of the Ports Act attract monetary penalties without court proceedings.
Under these schedules penalties range from imprisonment for up to six months to a fine of up to INR 2,00,000, or both, depending on the nature of the offence and contravention. Notably, the Ports Act provides that any unpaid fine or penalty, whether from a court or the conservator, can be recovered through the distress and sale of the vessel.8
CONCLUSION
The Ports Act has been enacted with the objective to augment India’s maritime sector by modernizing how ports are to be managed, ensuring compliance with global standards, laying a framework suitable for attracting private investment, and enhancing trade efficiency. Introduction of mega ports coupled with a rationalized tariff regime as contemplated under the Ports Act are likely to catalyze inflow of private investments into the ports sector. Further, by empowering port authorities and SMBs with greater autonomy and accountability, the Ports Act is likely foster a more conducive environment for rapid growth of the ports sector that is responsive to local needs.
The Ports Act, along with the other four new maritime legislations introduced this year, serves as a foundational pillar of India’s maritime regulatory framework and has ushered in a host of reforms that are aimed at addressing the diverse challenges facing the ports sector. However, harnessing the true potential of the Ports Act will be dependent on synergistic policies being adopted by Central and State Governments, effective implementation of the Ports Act and adoption of a collaborative approach by port authorities in their interactions with private investors.
1. ‘Major ports’ means any port declared as such by the Central Government by notification in the Official Gazette, to be a major port.
2. MOPSW, Annual Report 2024-2025.
3. Navigable rivers are rivers that are deep and wide enough to allow the passage of boats, ships, or other watercraft.
4. The Ports Act provides defines appropriate government to mean the Central Government in relation to major ports, and the State Government in relation to ports other than major ports.
5. The appropriate Government may notify such navigable rivers and channels leading to the port, as are prescribed by the Central Government in consultation with the State Government.
6. Section 55 of the Ports Act.
7. Section 54(1) of the Ports Act.
8. Section 58 of the Ports Act.