In a significant move, India is considering the complete removal of its cabotage laws, enabling foreign-flagged and registered ships to operate along its coast without requiring a permit from the Directorate General of Shipping, a key regulatory authority. Currently, only Indian-registered ships are permitted for local cargo transportation. The intended purpose of these laws was to safeguard domestic shipowners.

 

This initiative, viewed as a major reform in the shipping sector under the leadership of Prime Minister Narendra Modi, aims to promote coastal shipping as a cost-effective and energy-efficient mode of transportation for both passengers and freight. The plan involves fostering public-private partnerships with viability gap funding.

 

India's Finance Minister, Nirmala Sitharaman, previously emphasized the promotion of coastal shipping, underscoring the importance of enhancing ports and jetties, improving port connectivity, determining suitable vessel types and capacities, and mitigating financial burdens associated with multimodal transportation.

 

The Ministry of Ports, Shipping, and Waterways in India emphasized that these efforts would encourage a shift from road and rail transport to coastal shipping, ultimately benefiting end users. Infrastructure upgrades are deemed crucial for the efficient shipping and transport of various commodities such as coal, fertilizers, iron ore, steel, and food grains.

 

Presently, coastal shipping constitutes a mere 7% share in India's transportation mix, while road and rail command 62% and 31% shares, respectively. The existing cabotage rules have already been relaxed to address the lack of certain vessels in the Indian fleet.

 

Under the proposed changes, foreign-flagged ships will be allowed to transport export-import laden containers for transshipment, empty containers for repositioning, as well as agriculture, horticulture, fisheries, fertilizers, and animal husbandry commodities on domestic routes without the need for a license from the Directorate General of Shipping. Additionally, specific vessel types, including ro-ro, ro-pax, hybrid ro-ro, PCCs, PCTCs, LNG vessels, over-dimensional vessels, and project cargo vessels, will be permitted to operate in India's coastal trade without a permit. This move is anticipated to reshape India's coastal transportation landscape, promoting economic growth and efficiency.

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