Govt mulls allowing foreign vessels in coastal waters

New Delhi, February 14

The government is considering a proposal to permit foreign vessels to operate in Indian coastal waters with a view to reduce logistics cost, enhance port efficiency and boost domestic shipping industry, an official said.

The move would facilitate transportation of cargo between different ports along the country's coastline.

Currently, the Cabotage rules, which governs this activity, make it difficult for foreign flagged vessels to handle cargo between two domestic ports.

So far, the Cabotage policy in the country gives first preference to Indian flag ships over cargo and foreign vessels. Cargo and foreign ships were allowed only when no suitable Indian flag vessel is available for the same. Ministries, including shipping and commerce, are working on the proposal, the official said, adding the move would also help cut shipping rates and transportation time.

According to traders, there is a scarcity of Indian mainline vessels in the country and it impacts smooth movement of cargo and consignments.

Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai said that these norms should be relaxed as it will increase competition among ports and improve their efficiency to handle consignments.

"The government relax these rules on case to case basis, which is a temporary measure. It needs to liberalised to cut logistics costs as well," Sahai added.

States, including Gujarat, Kerala and Andhra Pradesh, too have asked for relaxation in the norms.

"We have received a proposal to liberalise the existing Cabotage rules to allow foreign vessels operate in Indian coastal waters. Concerned ministries are working whether the rules needs to be relaxed or not," the official said.

Besides textiles and commerce ministries, Container Shipping Lines Association (India), Indian Private Ports & Terminals Association are in favour of liberalising the rules.

However, the Indian National Shipping Association is not in favour of this liberalisation.

Indian traders use Colombo, Salalah (Oman), Singapore and Dubai hubs for shipments, adding to their costs. At present, about 60 per cent of India's exports and imports containers are transshipped through ports like Singapore and Colombo.

This trans-shipment through ports outside the country involves not only huge expenditure but also extra 7-10 days of transit time.

India has 12 major ports which fall under the Centre's jurisdiction and about 200 non-major ports under the control of states. The main ports include Kandla, Mumbai, JNPT, Adani Ports and Special Economic Zone Ltd and Gujarat Pipavav Port. — PTI