Complete Abolition of Cabotage Rules by the Government Possible

Government may totally abolish Cabotage rules
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The Indian government is considering a proposal to allow foreign registered/flagged ships to operate along the country’s coast without obtaining a licence from the Directorate General of Shipping. The move is aimed at promoting coastal shipping and fulfilling a budget announcement by Finance Minister Nirmala Sitharaman. However, local fleet owners, represented by the Indian National Shipowners Association (INSA), have opposed the easing of cabotage restrictions. INSA plans to discuss the government’s proposal at a meeting later this month in order to develop a strategy.

Currently, only Indian registered ships are permitted to transport cargo on local routes in accordance with India’s cabotage law. Foreign ships can only operate along the coast if Indian ships are not available, and they must obtain a licence from the DG Shipping. However, in 2018, the Ministry of Ports, Shipping, and Waterways allowed foreign flagged ships to transport specific goods on domestic routes without a licence from the DG Shipping, following lobbying efforts by foreign container lines. Critics argue that this exemption jeopardizes the interests of domestic ship owners.

The government’s proposal to further relax cabotage restrictions is expected to generate debate and opposition from local fleet owners. Advocates argue that it will boost coastal shipping and align with the goal of increasing connectivity and trade. However, opponents believe it will disadvantage local operators and open the market to increased competition from foreign shipping companies. The INSA meeting later this month will provide a platform for fleet owners to discuss their concerns and consider potential strategies in response to the proposal.

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