Indian coastal vessels may trade licence-free for domestic operations

NEW DELHI : The Union Cabinet has approved the Coastal Shipping Bill, 2024, which will remove the requirement for Indian-flagged vessels to acquire a general trading licence to operate on coastal waters once it gets Parliament nod.

“In view of the strategic nature of coastal shipping to the domestic economy and efforts to give impetus to the sector, it was felt necessary to give due weight to coastal shipping provisions and make them easily accessible to the industry,” officials aware of the developments said. “The Bill removes any licensing requirement for Indian vessels to participate in coastal trade. The licence conditions for foreign ships have been made statutory through this Bill,” an official said.

A draft coastal shipping Bill had been introduced for public comments in 2020 as well. The legislation has been carved out of Part 14 of the Merchant Shipping Act, 1958, to allow procedural ease for provisions related to coastal shipping. This part will be repealed once the Bill is codified into legislation.

The Bill was not immediately available, as it would be laid in Parliament before dissemination, a Ministry of Ports, Shipping and Waterways official said. “The Bill seeks to enable statutory imposition of different licence conditions as to indigenous build or staffing of crew, etc., on foreign vessels engaged in coasting trade for their regulation, to provide impetus to the domestic coastal shipping economy,” the official said.

The Directorate General of Shipping is moving to revoke these orders, which currently allow foreign-flagged vessels to engage in coastal trade for specific commodities, such as EXIM transshipment containers and agricultural products, without a license. The regulator noted that these orders may have placed Indian-flagged vessels at a disadvantage, leading to stagnation in the domestic container shipping market and increased reliance on foreign ships.

Revoking these privileges, coupled with regulatory support for Indian shipping, could improve service reliability, promote competition, and positively impact freight rates. The Ministry is considering these changes as part of its efforts to enhance operational efficiency and boost the domestic shipping industry.