Coastal shipping norms to be eased

The shipping ministry is considering relaxing the coastal shipping rules for container movement in order to promote transhipment activity at the International Container Transshipment Terminal in down-country Kochi.

Current cabotage norms allow foreign ships to ply on the coastline of the country only after getting prior licence from the government. While for cargo like bulk, dry bulk and liquid, the shipping ministry wants to make the cabotage law stricter by making licensing process conservative, it is proposing a lenient policy for containers.

According to the Merchant Shipping Act 1958, a ship has to be Indian or one chartered by a citizen of the country for it to engage in coasting trade. This will be the case except — as the same Section 407 suggests — for those operating under a licence granted by the Directorate General of Shipping.

The shipping ministry is currently drafting the final proposal on cabotage norms and the kind of relaxation it can provide to foreign vessels. “It should be ready in a couple of months to go for cabinet approval,” says a senior official.

While it is for the Cabinet to take a final decision on the matter, the ministry is pushing for a policy that will treat the movement of containers from the port of call to other ports as part of a single export-import process instead of movement on the coastline. The government is also concerned about the rising competition from neighbouring ports like Colombo, Jebel Ali (UAE) and Salalah (Oman) handling most of the Indian transshipment cargo.

Now, with China developing ports in Sri Lanka, the government is apprehensive about Indian cargo in Beijing’s hands — for, it raises security concerns.

The issue of cabotage relaxation has been under a lot of debate with the domestic shipping companies fearing a loss of business and a level playing field. Several countries, like the United States and Japan have protected coastal shipping. The Indian National Shipowners Association has written to the shipping ministry, seeking stricter cabotage rules that will permit only Indian flag vessels on the Indian coasts.

A recent report of Comptroller and Auditor General of India on management of vessels says the Indian shipping companies are in a disadvantageous position vis-à-vis those of other countries. Reason: higher incidence of taxation of around four-five per cent.

Industry experts stress on the need for stricter cabotage laws. For, they are important from the perspective of national security and commercially protecting the Indian tonnage. “It is not as if Indian ships are incapable of handling the transshipment cargo,” says a senior shipping analyst. “But the current norms do not give DP World flexibility of operating ships at ICTT.”

The DP World operated ICTT is expected to be operational before this year-end. As a senior official points out, Kochi, in Kerala, is close to the international sea route.

“It is a convenient port of call for mainline. We want mainline vessels to come to Kochi. In order for them to come we have to offer better facilities, tariffs, quality of service. The operation of feeder services has to be to their satisfaction.”