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There will no longer be a “cabotage” rule for ships moving all kinds of cargo on local routes in India. This will let foreign-flagged or registered ships work along the coast of the country without getting a license from the Directorate General of Shipping. The goal of this action is to boost trade along the coast and carry out what Finance Minister Nirmala Sitharaman said she would do in the Budget. The Indian National Shipowners Association (INSA), a group that speaks for local ship owners, will meet later this month to talk about the government’s plan and come up with a plan.

India’s cabotage rule says that only ships registered in India can carry goods on local routes. After getting a license from DG Shipping, foreign ships can only work along the coast when Indian ships are not available. In 2018, the Ministry of Ports, Shipping, and Waterways let ships with flags from other countries transport export-import (EXIM) containers that were full and needed to be re-positioned, as well as empty containers that were meant to be re-positioned, and goods for farming, fishing, horticulture, animal husbandry, and agriculture, without a license from the DG Shipping.

Some types of foreign-flagged ships, including Ro-Ro, Ro-Pax, Hybrid Ro-Ro, pure car carriers, pure car and truck carriers, LNG boats, and over-dimensional or project cargo, can now work in India’s coastal trade without a license from DG Shipping. This happened in September 2015. In her Budget speech to Parliament on February 1, Finance Minister Nirmala Sitharaman said that coastal shipping would be pushed as the most cost-effective and energy-efficient way to move both people and goods. This would be done through a Public-Private Partnership (PPP) mode with viability gap funds.

Right now, the only way for India to get around is by shipping along the coast. 62% are roads and 31% are trains. The Ministry of Ports, Shipping, and Waterways wants to add more coastal shipping to the mix of ways to get around. To achieve this, they plan to improve ports and jetties, find the right types of ships and how much space they have, lower the costs of multimodal transportation, and look for ways to connect with national waters as often as possible.

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