Govt seeking middle ground to free coastline for foreign ships may ease cabotage norms

March 20, 2015 10:51 am Published by

The government is looking for a middle ground to free up the coastline for foreign vessels’ movement without upsetting the Indian shipping business. It is planning to relax the cabotage norms for export-import cargo on the east coast to promote transshipment, while at the same time, it is also considering ways to provide level-playing field for Indian flagged vessels through tax incentives.
Cabotage refers to the transport goods or passengers between two points in one country by a ship or aircraft registered in another country. With its thrust on ramping up the maritime muscle of the country, Modi government wants immediate action on promoting transshipment, an area where India is losing out to neighbouring ports of Colombo, Dubai and Singapore.
Over 27.4% of India’s exportimport cargo is transshipped at foreign ports. “East coast has a much larger mix of transshipment cargo — up to 60%. Therefore, relaxing cabotage norms there would give us more results in reducing our dependence on foreign ports,” a senior government official said. The government was considering relaxing the coastal movement norms for EXIM cargo at all the ports but has revised its proposal after opposition from the Indian shipping companies.
“India does not have its own container service and relaxation would lead to restrictive trade practices in favour of foreign liners,” a senior member of Indian National Shipowners’ Association said. The government is also actively considering Kerala government’s request to relax cabotage for the Vizhinjam port. According to Section 407 of the Merchant Shipping Act, 1958, only Indian vessels or ships chartered by Indians can engage in coastal trade, though the Directorate General of Shipping can ..

The government exempted customs and excise duty levied on bunker fuels used in Indian flag vessels for transportation of EXIM and empty containers between two or more ports in India, in a step to boost transshipment. It had also relaxed the cabotage rules for the Dubai Port World-operated International transshipment container terminal at Vallarpadam Kochi in December 2012. But it did not achieve desired results with the customs department not recognizing ..

The shipping lines decide to use a port for transshipment depending on several factors such as availability of vessels, availability of cargo for onward journey, cost of transshipment at the port, convenient geographical location of the port, access to major trading centre, etc. The government would have to boost the capacity of ports and coastal shipping to make good of the transshipment opportunity.


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