Cabotage rule relaxation likely

PMO writes to shipping ministry on measures to boost trans-shipment cargo

The government is planning to relax cabotage norms for all the major ports for empty containers. The move would make it possible for foreign flagged vessels carrying empty containers to ply on India’s coastline from one port to another without restriction.

The Union Shipping Ministry has also asked for the response of the Directorate General Shipping on this matter since it is the directorate which regulates shipping in the country through its notifications.

Cabotage refers to the transport of goods or passengers between two points in one country by a ship or aircraft registered in another country.

The move is expected to boost transporting transhipment cargo long the coastline.

“There are currently only 15 vessels involved in coastal trade. Shortage of containers limits the capacity of Indian flagged vessels in transportation of cargo. It will also boost coastal shipping by filling the supply gap in container segment,” said a senior government official.

The Prime Minister’s Office too has written to the road transport and shipping ministry to suggest ways to increase transshipment cargo movement in India and avoid the offloading of containers in the neighbouring port of Colombo in Sri Lanka.

According to Section 407 of the Merchant Shipping Act, 1958, no ship other than an Indian vessel or a ship chartered by a citizen of India shall engage in the coasting trade of India, except under a licence granted by the Directorate General of Shipping.

The Union shipping ministry had relaxed these norms for Dubai Port World-operated International transshipment container terminal in Vallarpadam, Kochi in December 2012. Easing of such norms has been done to benefit the export and import trade in India and to reduce the transit time of up to seven days and international freight of up to  $300 per container

All the other major ports have thereafter requested the government to extend the relaxation for ships carrying empty containers.

“There is still some clarity required on whether the empty containers have to be treated as cargo as it is a source of revenue for the ship as accordingly the rules will have to notified,” a senior shipping company executive said.