Vallarpadam container terminal in Kochi is expected to get a boost with the Government deciding to relax Cabotage laws, allowing foreign vessels to operate feeder services for a period of 3 years.
The Union Cabinet on Thursday approved relaxation of the Cabotage policy under the Merchant Shipping Act, 1958, for transhipment of Export-Import (EXIM) containers to and from the International Container Transhipment Terminal (ICTT) at Vallarpadam, Kochi.
The relaxation will come up for review after three years. The move is good for the Dubai-based DPW — which operates ICTT in Vallarpadam.
It is expected to help ICTT capture transhipment cargo from Colombo and reduce dependence on nearby foreign ports.
existing policy
According to the existing policy, no foreign ship can engage in coastal trade in India (trade between ports in India) except under a licence from the DG (Shipping). This discourages mainline foreign vessels from calling at ICTT, Vallarpadam.
Indian container traffic has seen a steady growth over the years. Despite this, more than half of the container traffic of India is being transhipped at ports outside India, mainly at Colombo, Singapore, Salalah and Jebel Ali.
India had no port near international sea routes to handle large mainline vessels. Kochi Port enjoys nearly the same locational advantage as Colombo port with a mere 76 nautical miles deviation from the main East West shipping route.
Therefore, in order to attract mainline vessels for transhipment of Indian containers at ICTT, Vallarpadam, the present relaxation in Cabotage Policy has been given.
Anil Singh, Head of DP World Asia region, which runs the Vallarpadam terminal, said the Government’s decision will greatly help the Indian trade which has been transhipping cargoes through the neighbouring Colombo port.
About two million tonnes of Indian cargo is transhipped through Colombo every year.
If a part of this is handled at Kochi, it will be a huge saving for Indian trade in terms of freight costs, he said.
Ever since it started operation a year ago, Vallarpadam has been seeking relaxation of Cabotage laws which will help it to bring large container vessels to the port.