In a bid to improve domestic maritime competitiveness, India recently announced plans to relax its cabotage law, which has been a matter of discussion for many years. Under the present Merchant Shipping Act 1958, only Indian-flagged vessels or foreign-flagged vessels as licensed by the Director General of Shipping (DGS), can ply the coasting trade of India. The relaxation of the cabotage law will allow foreign ships carrying containers to tranship at Indian ports, as well as carry empty containers.
In a recent publication, the UK Club provided an overview of the Indian maritime cabotage regulations. ‘Coasting Trade’ is defined as the carriage of goods or passengers from any port or place in India to any other port or place in India or Sri Lanka or the Continent of India, explains V. Subramanian (Kumar), Advocate, Venky’s Chambers.
What laws govern the maritime cabotage trade in India?
The Indian cabotage rules are contained in Sections 406 and 407 under Part XIV of the Merchant Shipping Act 1958. The starting position is that only Indian flagged vessels can be used in the Indian cabotage trade.
Can foreign flagged vessels participate in the Indian Cabotage trade?
There is no express bar for foreign flagged vessels to operate in the coasting trade of India. However, foreign flagged vessels will need to be granted licences by the DGS in order to participate in the Indian coasting trade. Such a licence will be granted only if there is no Indian vessel available for the said purpose or operation.
The licence granted may be a general licence, a licence for the whole or any part of the coasting trade, or a licence for a specified period or voyage. The licence will be subject to any terms and conditions that the DGS may impose, as well as to the provisions of circulars and public notices issued by the DGS from time to time.
The procedure for an Indian or a foreign charterer to obtain a licence for a foreign vessel to be engaged in the coasting trade of India is for the charterer or operator to circulate a requirement to the INSA (Indian National Shipowners Association) seeking availability of Indian ships.
If INSA does not respond confirming availability within 48 hours, an application can then be made under Sections 406 or 407 as the case maybe, to the DGS with a copy of the request to INSA and the response received from INSA. The DGS may then grant a licence allowing the foreign vessel to operate in the coastal trade of India during the period of the licence.
What are the penalties or sanctions for breach of the cabotage regime?
There are no specific penalties. However, without a licence, Customs Authorities will not give the vessel port clearance.
