Competition, excess capacity and pricing of dry ports in India: Some policy implications

The pricing of dry ports and allied infrastructure is one of the many controversies of Indian economy at present. It arises out of the need to reconcile the cost of dry port infrastructure investments made by the government, with a long term objective of stimulating the national economy as a whole and regional economy in particular, with the pricing policies adopted by the dry port operator. Thus the role of public investment in infrastructure projects like dry ports is re-evaluated. With the end of public sector monopoly and entry of private sector in the logistics service industry, the resulting competition has raised the sceptre of the need for level playing field among the competitors. This paper shows how appropriate pricing of the dry port infrastructure is desirable for investment costs recovery on one hand but also assist the user in gaining competitive advantage by protecting them from predatory pricing policies of the private sector on the other hand. The paper advocates the need for regulating competition by way of suitable port policy formulation which would be conducive for the growth of international trade in India.