The Coastal Shipping Bill, 2024, aimed at promoting coastal trade and encouraging Indian-flagged vessels operated by Indian citizens, was introduced in the Lok Sabha through a voice vote.
- The Coastal Shipping Bill, 2024, is one of five new legislative measures planned for introduction during the ongoing Winter Session of Parliament.
Voice Vote:
- A voice vote is a method of decision-making in legislative assemblies where members express their agreement or disagreement with a motion verbally.
- Those in favor say “Aye,” and those against say “No.”
- The presiding officer (e.g., the Chairman in the Rajya Sabha) determines the outcome based on the louder response.
- Limitations: Voice Vote lacks a record of MPs present,
- there is no formal recording of individual vote,
- it doesn’t reflect individual stances,
- can be inaccurate.
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About Coastal Shipping
- Coastal Shipping refers to the transportation of goods and passengers along a country’s coastline, connecting its ports without venturing into international waters.
- Domestic Trade: It primarily involves domestic trade and movement between ports within the same country.
- Short-Distance Maritime Trade: It operates within a country’s territorial waters (up to 12 nautical miles from the baseline).
- Advantages of Coastal Shipping:
- Cost-Effectiveness: Coastal shipping is recognised as a cheaper mode of transportation compared to other options like rail or road.
- Example: Waterways transportation costs only Rs. 0.2-0.3 per ton-km. as against Rs. 1.2-1.5 per ton-km. by rail and Rs. 2.0-3.0 per ton-km by road.
- Fuel Efficiency: Maritime transport is more fuel-efficient and environmentally friendly.
- Decongestion: Reduces pressure on overburdened road and rail networks.
- Strategic Use: Enhances regional trade and emergency logistics during national crises.
Key Highlights of the Coastal Shipping Bill, 2024
- Objective of the Bill:
- Aims to promote coastal trade.
- Encourages the participation of Indian-flagged vessels owned and operated by Indian citizens.
- Focuses on national security and commercial needs.
- Provisions of the Bill:
- Licensing for Coastal Trade: The Bill seeks prohibition of trade in the coastal water without licence by vessels other than Indian vessels.
- Permits inland vessels to engage in coastal trading under specified conditions.
- Role of the Director-General: It also seeks to empower the Director-General to issue a licence after taking into consideration certain factors including citizenship of the crew and building requirements of the vessel.
- to create major jobs for India seafarers and to promote ship building in India.
- Revocation of licences: The Bill specifies the grounds for modification, suspension, or revocation of licences by the Director General.
- These include: (i) violation of terms of licence or an existing law, or (ii) failure to comply with directions of the Director General.
- National Database: The Bill seeks to create a National Database of coastal shipping so as to ensure transparency of procedures and aid in information sharing.
- Strategic Plan for Coastal Development: It provides preparation of a National Coastal and Inland Shipping Strategic Plan for development, growth and promotion of coastal shipping.
- Protection of Licence Holders: According to the Bill, no licence granted shall be suspended, revoked or modified, unless the licence has been given a reasonable opportunity of being heard.
- Powers to exempt: The central government may exempt any class of vessels from the application of the Bill.
- Compounding of offences: The Act allows all first offences to be compounded. Under the Bill, only following offences will be compoundable:
- undertaking coasting trade without licence or with an expired licence,
- taking a vessel into sea without licence,
- failure to furnish information,
- violating a detention order.
Coastal Shipping in India
- Strategic Advantage: India’s extensive coastline of approximately 7,500 km offers immense potential for coastal shipping.
- Proximity to major global shipping routes enhances its importance.
- Share of Coastal Shipping In India: Currently, coastal shipping only has a 7 percent share in India’s transportation mix, compared to 62 percent share in road and 31 percent in rail.
- Logistics Performance Index (LPI) Rank: India’s ranking in World Bank’s International shipment Logistics Performance Index (LPI) improved from 44 in 2018 to 22 in 2023.
- Volume of Cargo Handled: Cargo volume handled by National Waterways (NWs) increased from 108 MMT in Financial Year 2022 to 133 MMT in Financial Year 2024.
- Increase in Coastal tonnage: Coastal tonnage has increased from 260 MMT in Financial Year 2022 to 324 MMT in Financial Year 2024.
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Current Regulatory Framework
- Lacks Uniformity: The regulation of the coastal maritime sector in India lacks uniformity.
- Non-Mechanised Vessels: Non-mechanised vessels engaged in coastwise trade are governed by the Coasting Vessel Act, 1838 which only provides for registration of such vessels.
- Mechanised Vessels: Regulated under the Merchant Shipping Act, 1958.
Cabotage Law In India
- India’s cabotage law is regulated under the Merchant Shipping Act, 1958.
- It mandates the use of Indian-flagged vessels for coastal trade.
About Cabotage
- In the shipping industry, cabotage laws regulate how foreign-flagged vessels operate in a country’s domestic waters.
- These laws may restrict or prohibit foreign ships from transporting cargo or passengers between domestic ports.
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- But allows for relaxation under specific conditions to address:
- Lack of Indian vessels.
- Promotion of specialised cargo categories like Exim and Empty Containers, agriculture, fertilisers, over-dimensional cargo, Ro-Ro Vessels, LNG Vessels etc.
- Licensing Requirements for Foreign-Flagged Vessels under the Merchant Shipping Act, 1958
- Mandate for Foreign-Flagged Vessels: Foreign-flagged vessels intending to engage in coastal trade within India must obtain a license.
- Eligibility for Licensing: Applicable to vessels chartered by: Indian citizens, Indian companies or cooperative societies.
- Authority for Issuing Licenses: Licenses are issued by the Director General of Shipping under Sections 406 & 407(1) of the Merchant Shipping Act, 1958.
Government Initiatives To Enhance Freight Movement Through Coastal Shipping
- Coastal Berth Scheme under the Sagarmala Programme: The Scheme provides financial assistance for creation of infrastructure to promote movement of cargo/passengers by Sea/National Waterways.
- Relaxation in Licensing: Licensing relaxation under Section 407 of the Merchant Shipping Act allows container vessels to carry EXIM containers and empty containers at transshipment ports.
- Foreign flag vessels can transport agricultural, fisheries, horticultural, fertilizers, and animal produce commodities, provided these make up at least 50% of the cargo.
- Discount on Vessel and Cargo Charges for Coastal Vessels: A discount of 40% is offered by major ports on vessel and cargo related charges to coastal cargo vessels.
- Priority Berthing Policy for Coastal Vessels: Priority berthing policy for coastal vessels has been notified to reduce turnaround time for coastal vessels and improve their utilisation.
- Reduction of GST on Bunker Fuels: Reduction of GST on bunker fuels used in Indian Flag Vessels from 18% to 5%.
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Conclusion
The Coastal Shipping Bill 2024 seeks to strengthen India’s maritime sector by advancing coastal shipping, in line with the objectives of Maritime India Vision 2030.
December 5, 2024
