Funds Await Correction, Lie Low

The ministry of surface transport (MoST) has set up a committee headed by the joint secretary, shipping for overhauling the Merchant Shipping Act, 1958. The committee will include members from the industry and the regulators.

Sources said the reference points of this committee would include incorporation of some of the major international regulations covering maritime trade into the legislation. India is a member of the International Maritime Organisation, which periodically issues guidelines with reference to the management of vessels and their safety. The proposed amendments would seek to include the new International Ship Management codes.

The sources said other reference points would also include tightening of Section 21 & Sections 405, 406 and 407. Section 21 refers to the definition of an Indian ship and the latter three sections refer to licensing of Indian ships engaged in coastal transport and international transportation. However, these sections are also being addressed to eliminate any future controversies over cabotage laws. "Our idea is to put the cabotage laws beyond the pale of any doubt," they added.

 

Last year the MoST was left in a tricky situation over the Indian Oil Corporation's invitation for time charter of clean tankers for meeting coastal transportation requirements of petroleum products. That the time vessels which had been acquired through the bare boat charter methods had also participated in the tender was subsequently challenged in the Mumbai High Court. The sources said one of the major reasons for this kind of legal recourse was that some of the provisions of Section 21 are not currently clear. For instance, this section does not indicate whether a ship owned by an Indian company flying a foreign flag is a domestic or a foreign ship. Besides, this section also does not address the issue of foreign companies setting domestic companies under the Companies Act.

The sources said the amendment would clarify these issues, including prescribing a minimum domestic equity limit of at least 51 per cent for the vessels to be treated as domestic. This is intended to convey that merely flying a domestic flag was not enough.

The sources said the new amendments would also seek to put the onus of removal of wrecks on the vessel owners rather than the government. Currently this is one of the major problem areas, where vessel owners have failed to remove shipwrecks after accident, posing major navigational problems for vessels. Vessel owners collect the insurance after the wreck, but seldom remove the debris, which is currently cleared either by the MoST or by the Indian Navy at huge costs, the sources added. The amendments will also decide on the conversion and upgradation of the Directorate General of Shipping into a separate and autonomous Maritime Authority, as recommended by the Pinto Committee in 1997.

CHARTED COURSE

* Include the new International Ship Management codes

* Tighten Section 21 & Sections 405, 406 and 407*

* Put the onus of removal of wrecks on the vessel owners rather than the government

* Convert the directorate general of shipping into a separate and autonomous maritime authority, as recommended by the Pinto Committee in 1997.

* Section 21 refers to the definition of an Indian ship and the latter three sections refer to licensing of Indian ships engaged in coastal transport and international transportation