India’s #CabotageLaw demands a healthy debate

August 7, 2015

My Blog in @SaddaHaqMedia India’s #CabotageLaw demands a healthy debate @nitin_gadkari @narendramodi @shipmin_India .

The Indian Cabotage Law makes it mandatory to use Indian ships for transporting cargo between ports along the country’s coast.

Do read the wrietup and share your views on this.


Finally a decisive government is there at the centre that is clearing files pending for long and taking timely decisions. Prime Minister Mr. Narendra Modi seems keen to encourage private enterprise, and relook India’s highly restrictive Cabotage laws.
Being Chief Minister of Gujarat, Mr. Modi had campaigned for cabotage rules to be relaxed for Pipavav and Mundra, the two largest container ports in the area. Recently, the Shipping Ministry of his government has also written to the Directorate General of Shipping (DGoS) seeking relaxation on the transshipment of goods through overseas containers.
The move is seen as an attempt to create a level playing field for local container carriers as the country prepares to further relax the Cabotage Law and allow foreign box lines to carry transshipment and empty containers.
Cabotage Law is a legislation referred to shipping along coastal routes and port to port connectivity.
Now the word is used to refer to the transport of goods or passengers between two places in the same country by a transport operator from another country, which includes aviation, railways, and road transport.
The Indian Cabotage Law makes it mandatory to use Indian ships for transporting cargo between ports along the country’s coast.
Foreign ships can be allowed to operate only when Indian ships are not available after taking a licence from India’s maritime regulator.
Ever since taking up the ministerial role Mr. Nitin Gadkari has been very active for improving the efficiency of our shipping. India has a coast-line of over 7,517 Kms with 12 major ports and 200 notified non-major (minor/intermediate) ports along the coast-line and sea-islands. A slew of measures are on the anvil for development of all these ports to ensure they contribute at least two percent to the GDP by 2020.
The government has invested almost Rs 430 billion in last four years to develop our major ports. 90 percent of the country’s trade in respect of volume while 70 percent by that of value is moved through maritime transport.
These 12 major ports handle approximately 58 percent of cargo
Promotion of Coastal Shipping has been one of the focus areas of the NDA government under Mr. Modi. Despite numerous advantages of fuel efficiency, lower carbon emission and ability to handle large parcel sizes, the share of coastal shipping in domestic cargo is about seven percent because of impediments such as absence of assured return cargo, high manning costs, high duties on bunker fuel.
A change in the Cabotage Law would give Indian ports an opportunity to become large transshipment hubs, especially deep-water ports in the south, which are closest to the main East-West shipping lanes.
Once the fourth terminal at Jawaharlal Nehru Port (JNPT) is built, sufficient capacity might also be in place for the Mumbai port to handle some transshipment cargo. The Indian port terminals will handle more cargo whereby the port earnings will increase besides tax benefits to the economy and the nation. Then over 60 percent of India’s inbound and outbound containerised cargo will be moved through the Mumbai area.
During 2014-15, Major and Non-major Ports in India have accomplished a total cargo throughput of 1052.52 tonnes reflecting a modest increase of 8.2 percent over 2013-14 compared to a growth of 4.1 percent in the previous year. Under the able leadership of Prime Minister Mr. Narendra Modi, relentless efforts of Mr. Gadkari are bearing fruits as The growth in cargo handled at Major ports in 2014-15 were 4.7 percent and 13.0 percent respectively compared to 1.8 percent and 7.5 percent in 2013-14.
At the end of March 2015, the cargo handling capacity of all these major ports touched 871.52 Million Tonnes.
Chidambaranar (Tuticorin) Port is a major port of India. The Government has announced establishment of outer harbour project in VOC Port with 16 m draft so as to handle large size ships. The Outer Harbour project will lead to substantial socio-economic development and industrialization of the hinterland of the Port and promote EXIM trade.

The project is to be developed in 3 phases, the investment required for each phase is:

In current scenario, India’s containerized cargo is usually transshipped in: Singapore and the Malaysian ports of Port Tanjung Pelepas and Port Klang for importers and exporters using the Indian east coast; Middle East ports such as Jebel Ali, Khor Fakkan and Salalah for Indian west coast origins/destinations; and Colombo (Sri Lanka) for both west coast and Bay of Bengal ports.
Presently, coastal shipping services, including feeder operations, are restricted to Indian-flagged vessels.
The only exceptions are licences that can be issued by the country’s Directorate General of Shipping (DGoS) to foreign owners, but these are generally limited to specific periods of time. Usually licences are only granted if suitable Indian-flagged tonnage is not available.
Under ‘Make in India’ campaign, the industrial sector is expected to get a major boost which will also bring a steep rise in production of raw and finished goods. In any case, export of these goods that is bound to bring in huge foreign exchange is dependent on shipping.
During, 2014-15 the non-major ports in Tamil Nadu collectively handled 0.83 Million tonnes of cargo traffic as compared to 0.87 million tonnes in the previous year.
Berth occupancy, and profit earned during 2014-15
About 2 million ships originating in and destined for India every year gets transshipped at Colombo alone, and the government has been looking at ways to cut India’s dependence on neighboring hub ports to send and receive containers, thereby saving time and costs for the exporters and importers.
However, the NDA government understands that a lot needs to be done for the sector. The Congress-led UPA government’s approach had slowed down all forms of reforms and development, which the BJP government is determined to change.
The shipping ministry under Mr. Gadkari has been weighing in a plan to relax cabotage for at least four more ports, including Mundra, Pipavav, Vizhinjam and Vizagto tide over a shortage of Indian box ships to carry transshipment containers.

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