In a significant expansion of India’s maritime infrastructure, Essar Ports Ltd has secured a major concession from the Deendayal Port Authority (DPA) to develop a multipurpose terminal at Tuna Tekra, near Kandla, Gujarat. The project, which involves a total investment of ₹2,276.06 crore, is structured as a 30-year build-operate-transfer (BOT) model. As this development progresses, stakeholders must navigate not only the engineering complexities of high-capacity port construction but also the intricate fiscal requirements governing long-term public-private partnerships.
Infrastructure Allocation and Financial Scope
The project represents a collaborative investment framework. Essar Ports will commit ₹1,552.57 crore toward the construction of the terminal superstructure and specialized cargo equipment. Simultaneously, the DPA will invest ₹723.49 crore in essential common-user facilities, including capital dredging for access channels, turning basins, and the development of approach roads. Designed to handle 18.33 million tonnes per annum (mtpa), the terminal will feature four berths totaling 1,200 meters in length with an 18-meter draft, enabling the facility to manage Cape-size vessels up to 170,000 deadweight tonnes. This capacity is vital for western maritime trade gateways handling bulk energy and commodities.
Fiscal Framework and Indirect Tax Architecture
For large-scale infrastructure projects, the transition from construction to operational phases triggers significant indirect tax obligations. Under the BOT model, revenue-sharing arrangements and royalty payments between the concessionaire and the port authority are subject to GST. Depending on the nature of the transaction, these may attract the Reverse Charge Mechanism (RCM), requiring meticulous invoice auditing to ensure tax neutrality.
Furthermore, the project serves as a case study for the application of Section 17(5) of the CGST Act. As the developer executes civil works, the distinction between immovable property and movable plant and machinery becomes critical. While ITC is generally blocked for works contracts related to immovable property, equipment such as ship-to-shore cranes and automated handling systems remain eligible for credit. Ensuring stringent GSTR-2B reconciliations and ITC eligibility checks is essential to prevent liquidity bottlenecks caused by vendor non-compliance or misclassification of capital assets.
Operational Sustainability and Regulatory Compliance
As Essar Ports reconstitutes its operational footprint—moving toward its goal of enhanced supply chain resilience—the Tuna Tekra terminal will act as a foundational pillar. The facility is expected to alleviate congestion at nearby dry-cargo berths and improve vessel turnaround times. From a tax perspective, operational revenue generated from pilotage, cargo handling, and berth hire will attract an 18% GST rate. Because demurrage and detention charges are inextricably linked to the primary service of cargo handling, they must be treated as incidental charges within the same tax framework to avoid dual assessment risks.
By aligning infrastructure development with rigorous fiscal planning, the project contributes to Gujarat’s industrial and logistics ecosystem. Success in this venture will depend on the ability of the concessionaire to balance engineering excellence with the proactive management of indirect tax compliance across the entire 30-year lifecycle of the terminal.
Frequently Asked Questions
The project has an estimated cost of ₹2,276.06 crore and an annual handling capacity of 18.33 million tonnes of multipurpose cargo.
Essar Ports is investing ₹1,552.57 crore, while Deendayal Port Authority is contributing ₹723.49 crore toward the terminal and supporting infrastructure.
The terminal will feature four berths of 300 metres each (1,200 metres total berth length), an 18-metre draft, and will be capable of handling Cape-size vessels up to 170,000 deadweight tonnes.
The port authority will execute dredging for the access channel, berth pockets, and turning circles, as well as provide a common approach road.
The terminal has been awarded under a 30-year build-operate-transfer (BOT) concession through a public-private partnership (PPP) route, following a global competitive bidding process.
Essar Ports developed and operated 168 mtpa across India and monetized 148 mtpa through strategic transactions; its active portfolio spans roughly 60 mtpa across India, the UK, and Indonesia.
