Business Standard

Cabotage Act relaxed to boost ICTT business

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The Union government has decided to allow foreign feeder vessels at the International Container Transshipment Terminal (ICTT) at Vallarpadam near, Kochi, by relaxing the Mercantile Shipping Act of 1958.

The relaxation in the cabotage regulations, announced on Thursday, is for three years and ships carrying Chinese and Pakistani flags would not be allowed at the port.

Current cabotage norms allow foreign ships to ply on the coastline of the country only after getting a licence. The Merchant Shipping Act, 1958, Section 407, states that no ship other than an Indian ship or a ship chartered by a citizen shall engage in coasting trade except under a licence granted by the Directorate General of Shipping. The relaxation would allow containers that arrive at ICTT to be shipped to other Indian ports.

Kerala has been asking for this since the last two years. The decision was delayed mainly due to the strong protests from the Indian National Ship Owners Association.

It was decided to relax the Act at a PMO meeting held in June that was also attended by the Cochin Port Trust (CPT) chairman. It is learned the meeting had proposed to relax the tonnage tax for domestic feeder vessels. The proposal is now awaiting clearance from the finance ministry.

According to Jose Paul, former chairman of Goa Port, the delay in the relaxation of the Act had led to Colombo emerging as a strong competitor to ICTT.

Meanwhile, a Cochin Port Trust official told Business Standard that the financial position of CPT was in very bad shape as it suffered a net loss of Rs 85 crore in 2011-12. The port has availed of a loan of Rs 100 crore from the State Bank of India to tide over the crisis. The volume of business at the port had dropped drastically. Container movement dropped 17 per cent in this May at ICTT.

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