Cabotage relaxation yet to take effect

The defence ministry, especially the Indian Navy, has raised security issues and is keen on scanning of all the containers passing through the terminal

The Kochi International Container Transshipment Terminal (ICTT) is still awaiting the notification on cabotage relaxation and this is impacting operations at the terminal, port sources said.

The cabinet had sanctioned a relaxation for a period of three years to the terminal this September, but the order from the Director General of Shipping is still pending. It is learned that the Defence ministry had raised concerns over the relaxation.

Meanwhile, top officials of DP World, the operators of the terminal, held discussions with the Southern Naval Command in this regard. Besides, a senior officer from the Defence ministry visited the port on Tuesday and held discussion with the Cochin Port Trust (CPT) chairman. The stakeholders of the terminal, especially the shipping agents, had already raised the issue with Defence Minister AK Antony. Cabotage relaxation is a pre-condition for the full swing operation of the terminal.

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.

The defence ministry, especially the Indian Navy, has raised security issues. According to sources, the ministry is insisting on scanning of all the containers passing through the terminal. However DP World sources said this was impractical as it would delay transportation of containers to various ports across the globe. As all the containers are brought to the terminal after Customs checking, scanning was not imperative, they said.

Containers are checked and scanned at the origin and only transshipment is done here. Globally, such containers are not checked again at the transshipment hub ports, they added.

At present, the terminal does not have a scanning facility. The Defence ministry, it is learned, is keen on scanning as a few incidents of smuggling of goods like red sandalwood through the Vallarpadam terminal were reported.

A Cochin port official told Business Standard the Defence ministry had not raised such issues in the case of other transshipment terminals.

A port official said CPT had suffered a net loss of Rs 85 crore in 2011-12. The port has availed of Rs 100 crore loan from State Bank of India to tide over the crisis. The terminal has an in-built capacity to handle 1 million TEU per annum, but the actual achievement during the last 18 months was below 500,000 TEUs. Though the terminal was commissioned in February, 2011, no mother ship had berthed here so far due to reasons like Cabotage restriction and insufficient draft at the berths, he said.