Cabotage rules may be eased for movement of empty containers

The Shipping Ministry, as part of formulating a coastal shipping policy, is considering a proposal to relax cabotage rules for movement of empty containers along ports, a top Ministry official said.

Cabotage rules prevent foreign-flagged ships from picking and dropping domestic cargo between various Indian ports. It protects the domestic cargo market for Indian-flagged shipping firms.

Indian-flagged shippers, led by the Indian National Shippers Association (INSA), are against any form of cabotage relaxation. But, freight forwarders say they want ships to run on a time-table format, or regular intervals so that it can form a part of their logistics network. (Freight forwarders are firms that book cargo and make transportation arrangements). In effect, the forwarders want liner services, something that shipping firms with deeper pockets can consider, as it is usually loss-making unless there are large cargo volumes

Cabotage relaxation is a desired move from the perspective of lowering the cost of empty movement of containers, the official said.

But, INSA CEO Umesh Grover, said: “China, Europe and the US have strict cabotage laws for empty container movement. When Indian shipping firms have adequate capacity, the solution lies in encouraging Indian firms by providing them with a level-playing field.”

The Shipping Ministry is considering a comprehensive coastal shipping policy for transportation of goods domestically, for which it is expected to approach the Cabinet in a month or two. It has invited comments from the Finance Ministry and the Planning Commission.

It is also expected to write to all States, asking them to lower the level of value added tax (VAT) charges on bunker fuel, as has been done by the Kerala Government.

A steering committee, headed by Shipping Secretary Vishwapati Trivedi, is evaluating the policy. In January, a committee headed by National Shipping Board Chairman PVK Mohan submitted a report suggesting various policy measures to encourage coastal shipping, though it had not suggested cabotage relaxation.

Another proposal In another proposal, which is at a “conceptual stage”, the Ministry wants to access the Global Environment Fund through the Environment Ministry to sanction ₹50 crore each to 12 major and nine non-major ports.

The idea is to develop jetties that can be outside the custom-bound area, as the domestic cargo movement should not have to go through the custom boundaries. Customs department officials have concerns on this.

The Ministry official said it would direct all port trusts to prioritise handling of domestic cargo. Incidentally, ports make more money by handling export-import cargo.

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