Coastal Shipping Bill, 2024 Introduced In Lok Sabha

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.

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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.

• 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.