In a bold reform in India’s shipping sector, the Centre is considering complete removal of cabotage rules for ships transporting all types of cargo on local routes. This move is expected to permit foreign-registered and flagged ships to conduct business along India’s coastline without the need for a license from the Directorate General of Shipping.
The decision, aimed at stimulating coastal shipping, is anticipated to have far-reaching consequences, particularly for local fleet owners who have traditionally opposed easing cabotage restrictions.
Under the cabotage law, only Indian-registered ships have been allowed to operate on local routes for cargo transport. Foreign vessels could engage in coastal shipping only when Indian ships were unavailable, subject to obtaining a license from the Directorate General of Shipping. These laws were designed to safeguard the interests of domestic ship owners.
Globally, maritime nations tend to impose stricter cabotage restrictions to protect their national fleets, a practice more extensive than what is observed in Asian countries. For instance, the United States restricts coastal trade to ships built, owned and manned by Americans.
Critics argue that the relaxation of cabotage rules may give foreign-flagged ships a cost advantage, creating an uneven playing field for local ship owners. They call for measures that ensure fair competition and provide domestic fleet owners with a level playing field.
The government’s move to completely ease cabotage restrictions is poised to spark a spirited debate within India’s maritime sector, raising questions about the future of coastal shipping and the role of domestic fleet owners in shaping the country’s shipping landscape. The government’s decision, if implemented, could significantly impact container ship owners and operators in India.
