Coastal Shipping Bill faces backlash
NEW DELHI : The Coastal Shipping Bill has come under criticism for exerting “excessive control” over the hiring of foreign-flagged ships, a move exporters and importers argue will increase transaction costs and undermine the global competitiveness of Indian exports.
Currently awaiting parliamentary approval, the Bill has also drawn ire for restricting the ability of Indian commodity traders to charter foreign-flagged ships exclusively for international voyages.
The draft legislation aims to exempt Indian-flagged vessels from licensing requirements for coastal operations within the country.
Chapter 4, Clause 10 of the Coastal Shipping Bill addresses the “Licensing of Chartered Vessels Other than for Coasting Trade” and applies to all sea-going vessels chartered by Indian citizens, non-resident Indians (NRIs), overseas citizens of India (OCIs), companies, cooperative societies, limited liability partnerships (LLPs), or any other entities specified by the Central Government. The clause governs vessels operating from Indian ports to international ports, and vice versa, as well as between international ports.
Clause 11 further stipulates that no vessel other than an Indian-flagged vessel, chartered by the aforementioned entities, can operate without obtaining a license from the Director General of Shipping. This requirement extends to vessels departing from or arriving at ports within India, as well as those transporting cargo between two international ports.
In effect, the Bill mandates that any Indian entity—including individuals, companies, cooperative societies, LLPs, NRIs, or OCIs—must obtain a license to charter foreign-flagged ships. This licensing requirement applies to coastal operations, imports, exports, and even transporting cargo between foreign ports once the Bill is enacted.
A maritime lawyer based in Mumbai pointed out that under Section 406 of the Merchant Shipping (MS) Act, Indian charterers must obtain a license from the Directorate General (DG) of Shipping to charter a foreign-flagged vessel exclusively for international routes.
“Banks require this license to process remittances for charter hire by Indian entities,” the lawyer explained.
A government official further elaborated, stating that even when an Indian entity charters a foreign-flagged vessel for operations entirely outside India—from one foreign port to another—a license is still mandatory. “If such a vessel encounters an accident and the matter reaches the International Maritime Organization (IMO), it would still reflect on the Indian entity. While the shipowner typically holds primary responsibility, we cannot entirely abdicate our accountability,” the official added.
Despite being named as the Coastal Shipping Bill, the legislation extends its scope to cover export-import (EXIM) trade as well.
“Although the name suggests a focus on coastal shipping, the Bill also regulates export and import activities, along with permissions for Indian entities to charter foreign-flagged ships for operations outside India,” the government official clarified.