Shipping ministry retains relaxations for foreign ships in coastal trade, Indian vessels to face continued competition

India’s shipping industry is set for continued competition from foreign-flagged vessels in coastal trade, with the Centre restoring the 2018 relaxations to ensure capacity for exporters and importers amid geopolitical disruptions.

The Shipping Ministry, through an order on August 10, has restored relaxations allowing foreign-flagged vessels to carry specified categories of cargo between Indian ports, opting for continuity amid geopolitical disruptions and capacity constraints in global shipping.

The ministry’s order in August has rescinded two orders issued earlier this year in January reversing the 2018 relaxations that had provided foreign shipping lines a transition period to comply with the stricter cabotage regime.

The latest order allows foreign-flagged vessels to carry the specified cargo between Indian ports and also ensures shipping capacity remains available during a period of global disruption.

The Ministry said the withdrawal of the January and March orders till September was intended to provide policy stability and operational certainty to India’s maritime trade and logistics sector at a time when geopolitical developments were disrupting global shipping.

Jagannarayan Padmanabhan, Senior Director and Global Head-Consulting, Crisil Intelligence, said the decision “essentially maintains continuity and status quo” for shippers and shipping companies and avoids another regulatory transition. For Indian-flagged shipping companies, however, the decision means they will not get exclusive access to the eligible coastal cargo and will continue to compete with foreign carriers, he added.

Maritime trade expert Rajesh Menon said retaining the arrangement was necessary to ensure adequate availability of ships for India’s export-import trade. “Since the geopolitical situation is grim, there should be availability of ships. Hence, the status quo of allowing foreign vessels in coastal trade needs to be maintained,” he said.

A former official of the department questioned the rationale behind restoring the 2018 relaxations after the government had undertaken a review and sought to withdraw them earlier this year.

“If after a thorough review involving stakeholders, it is determined by the competent authority that the 2018 Orders have not served their intended purpose and have accordingly been withdrawn duly, it is a matter of public concern that the same Orders that have been regarded as worthless by the Government’s own elaborate review process, are sought to be given a fresh lease of life for no ostensible reason than vaguely stating that ‘policy stability and operational certainty to safeguard India’s Maritime and Logistics sectors’,” he said.