With the anti-cabotage lobby getting stronger, the Government has started examining the extent to which the regulation that restricts foreign ships carrying coastal cargo can be relaxed.
Over the past couple of weeks, the Shipping Ministry had discussions with shippers, port officials, shipping lines and other stakeholders of coastal shipping to elicit their views on the subject.
The Ministry is considering a proposal to allow foreign lines to carry transhipment and empty containers from one Indian port to another, said an official who participated in the discussion.
The cabotage provisions in the Indian Merchant Shipping Act do not allow foreign flag vessels to carry local cargo from one Indian port to another. Exemption is granted only when a suitable Indian ship is not available to carry a particular cargo.
Shippers and port operators have been lobbying for lifting this restriction which they feel is an impediment for the smooth flow of cargo. Shipping lines have to move empty containers as there is a mismatch between import and export of containerised cargo.
But Indian shipowners have been opposing any relaxation in cabotage that ensures them reservation of coastal cargo. A change in the cabotage policy, they feel, will affect growth of Indian shipping tonnage. Their contention is that since 100 per cent FDI is allowed in shipping, foreign lines can bring their ships under Indian flag and carry local cargo.
The Shipping Ministry has been discussing the issue with all stakeholders and it will firm up its view in the next few days, said a Government official.
Of late, the anti-cabotage lobby has become stronger with large private ports and foreign terminal operators joining hands with shippers and the Government-owned ports.
The Indian Private Ports and Terminals Association (IPPTA) has asked the Ministry to allow foreign lines to carry transhipment cargo from one Indian port to another.
Currently foreign lines are allowed to load export cargo or unload import cargo at any Indian port, but they cannot pick up an imported consignment for delivery to any other Indian port or aggregate export cargo from different ports to one Indian port.
In the process, Indian ports are losing the opportunity to become hub ports, pointed out the association.
IPPTA says it is seeking permission to allow foreign vessels to carry only customs sealed transhipment containers bound for export from one Indian port to other. This will help foreign lines to aggregate export cargo and in turn reduce the logistics cost for Indian exporters.
R Kishore, President of IPPTA, says Indian shipping lines do not have the capacity to carry transhipment cargo. Even for carrying bulk cargo, Indian shipowners do not have enough barges or small ships. This is evident at ports like Vizag or Haldia, he said.
In 2012 the Government had relaxed cabotage regulation for Vallarpadam container terminal near Kochi, run by DP World Dubai, for a period of three years.