India’s maritime ambitions: decks cleared for new Merchant Shipping Bill to ease ownership, protect seafarers, tackle pollution

India is eyeing expansion of ship and vessel ownership norms and also relaxation in vessel registration and charter norms as it plans to provide a thrust to the nascent shipbuilding industry, and ensure greater global presence in the sector. Plans are on to overhaul the Merchant Shipping Act – repeal and replace the older legislation with a new one.

Under the new provisions, the Bill will seek to provide flexibility to India to determine the criterion for registration of vessels under the Indian flag. This includes ownership by NRIs (non-resident Indians), OCIs (overseas citizens of India), additional corporate structures (such as limited liability partnership) and express registration of a foreign vessel chartered on a bareboat charter cum demise contract by an Indian charterer.

Earlier, the Merchant Shipping Act of 1958 stated that a ship flagged in India had to be 100 per cent owned by Indian citizens, or be owned by a company or body established under a Central or State Act with its primary place of business being India; and all of them had to be registered.

“The move is expected to reduce the compliance burden, increase quality and quantity of tonnage under the Indian flag,”the Cabinet note prepared and presented on November 6 for approval said. ( businessline has reviewed a copy of the note.)

India’s share in the global ship-building and ownership sector is less than one per cent. The country has 1526 ships with a gross tonnage of 13 million tonnes. Of these ships, one -third are used in overseas trade.

According to a senior official of the Ministry of Ports, Shipping and Waterways (MoPSW), expansion of eligibility criteria for owning a ship under Indian flag (earlier restricted to only three categories ) will now mean, any vessel can be owned by any entity as notified by Central Government; it also means, registration of Indian flagged vessels without the need to visit Indian ports.

The new provisions will enable registration of chartered vessels and will also allow for temporary registration for ships sought to be recycled in India.

“All these are aimed at promoting ease of doing business,” the official said.

“In drafting of the Bill, best practices adopted by United Kingdom, Singapore, and Australia, were considered since these countries, like India, have common law legal regimes. Additionally, the laws in Japan, US and the European Union have also been analysed,” the official added.

Cabinet approval for the Merchant Shipping Bill 2024 has been received and MoPSW officials are hopeful of the Bill being presented and passed during the upcoming winter session of the Parliament.

Protection to Seafarers

The Bill – copy reviewed by businessline – will also seek to enhance rights, privileges and protection accorded to seafarers. For instance, provisions for repatriation of abandoned seafarers have been strengthened; and there is a provision to arrange for replacement crew to be sent on board abandoned vessels.

In fact, there is a clear definition – for the first time – as to what constitute an abandoned vessel and the action that can be taken against “unsafe vessels” to protect Indian waters.

The proposed Bill seeks to introduce for the first time a statutory framework for regulating maritime emergency response against maritime incidents. It also empowers the Centre to undertake required salvage operations.

Prevention of Marine Pollution

It has been proposed, action be taken against vessels that are declared unsafe, and pose a threat to safety of life at sea and environment. A principal officer will be empowered for the same.

Apart from monitoring and surveillance provisions , the Bill empowers denial of entry, detention or removal of such errant vessels. Mandatory insurance and other financial security against possible accidents such as an oil spill has been prescribed. The Centre can set-up its own fund for compensating for oil pollution damage beyond coverage.

The official said, a 2016 Bill lapsed in May 2019 due to dissolution of the 16th Lok Sabha. The Merchant Shipping Bill, 2024 will however not seek repeal of the “Part XIV of the Merchant Shipping Act 1958” - that deals with control of Indian ships and ships engaged in coasting trade. “The Merchant Shipping Bill, 2024 does not contain any provision covering this aspect,” he said.

A separate Bill dealing with coastal shipping will be introduced to repeal Part XIV.