Insa Welcomes New Dgs Order

In a move that will provide a level playing field to Indian shipping lines, the directorate general of shipping (DGS) has said foreign companies will now have to acquire a licence even to operate outside Indian territorial waters.

The new order is, however, applicable only to those foreign shipping lines, which have been chartered by Indian citizens, companies or cooperative bodies.

The licence will have to be obtained under Section 406 of the Merchant Shipping Act, 1956.

The directorate general of shipping clarified this in a recent letter to the Central Board of Excise and Customs, a copy of which is available with Business Standard.

 

The order is a volte-face, as the directorate had earlier taken the line that foreign shipping lines did not require a licence, as long as they operated more than 12 nautical miles off the Indian coast.

The clarification follows hectic lobbying by Indian National Shipowners Association (INSA), the apex body of Indian shipowners.

Sources in INSA welcomed the development and said, "This is in line with the guidelines laid down by the directorate general of shipping. A wrong has been corrected."

Section 407 of the Merchant Shipping Act, 1958, clearly specifies that foreign ships, including those chartered by Indians, will have to obtain a licence to trade in Indian coastal waters.

World over, countries reserve coastal trade for domestic shipping companies.

Section 406 of the Merchant Shipping Act, 1956, stipulates that any Indian ship or ships chartered by an Indian will have to acquire a licence to trade, irrespective of whether it is in domestic or international waters.

INSA sources argue that since foreign shipping lines did not require a licence to trade outside Indian territorial waters, they had an unfair advantage.

They said the earlier norms encouraged certain Indian PSUs, having operations outside the 12 nautical mile zone, to charter foreign vessels.

INSA therefore protested the extension of Section 407, which permitted foreign flag vessels to operate in coastal waters without a licence, and Section 406, which made it mandatory for Indian shipping lines to obtain one.

The directorate general of shipping has now veered round to INSA's point of view.