Govt. to lift cabotage rules to boost coastal shipping

The government is set to abolish the cabotage rule for all cargo types on domestic routes, allowing foreign-registered ships to operate along India’s coastline without needing a directorate general of shipping license.

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The government, making the biggest reform in the shipping sector, is planning to entirely lift the cabotage rule for ships carrying all types of cargo on domestic routes. This move will allow foreign-registered vessels to conduct business along India’s coastline without the requirement of obtaining a license from the Directorate General of Shipping.

The move is to boost coastal shipping, the government is taking steps that are likely to unsettle local fleet owners. These fleet owners have consistently opposed the relaxation of cabotage restrictions.

The Indian National Ship-Owners Association (INSA), a lobby group representing local fleet owners, is scheduled to hold a meeting later this month to chalk out a strategy for the government’s proposal.

India’s cabotage law currently restricts the operation of cargo-carrying ships on local routes in India. Foreign ships are permitted to operate along the coast only when Indian vessels are unavailable, and this requires obtaining a license from the Directorate General of Shipping, in accordance with a decades-old law intended to safeguard the interests of domestic ship owners.

However, in 2018, due to vigorous lobbying efforts primarily by foreign container lines, the Ministry of Ports, Shipping, and Waterways introduced a significant change. It allowed foreign-flagged ships to transport export-import (EXIM) laden containers designated for transhipment, empty containers intended for repositioning, as well as commodities related to agriculture, horticulture, fisheries, fertilizers, and animal husbandry on domestic routes without necessitating a license from the Directorate General of Shipping.