Movement of goods by coastal shipping is one of the most energy-efficient and the least environmentally damaging form of transport. Given that India has a long coastline of 7,517kms, coastal shipping can act as a complementary mode of transport to facilitate reduction of logistics cost. The developed countries recognize coastal shipping as an inseparable and important part of the overall transport network of the country. There is huge scope for its development in India. However there are some challenges faced by coastal shipping in India that include lack of integrated transport policy to promote inter-modal coordination, non-availability of concessional finance rates to acquire coastal vessels, cumbersome customs procedures, lack of quality manpower, high import duties on bunker oil & spares, etc.
The present Cabotage Law bars foreign vessels from carrying cargo between Indian ports (coastal trade) but exceptions are made if no suitable Indian vessel is available. The market of shipping industry being highly volatile, such protection creates a certain degree of stability for the Indian vessels. Few countries practice absolute Cabotage law while others practice a tailored one. According to the industry experts, In India, the Cabotage Policy is not absolute. It is regulated through provisions of Sec. 406 and 407 of the Merchant Shipping Act, 1958. The Draft Coastal Shipping Policy submitted to Ministry of Shipping for approval recognised that due to lack of containerisation and restrictions on feedering of the cargo under the current Cabotage policy, a considerable part of Indian cargo for transshipment through containers gets diverted to Colombo, Singapore and Jebel Ali Ports. If coastal shipping in India is opened up to foreign flag vessels, it will provide a significant boost to containerisation levels and related infrastructure. However Indian shipping
Rajat Khosla Country Manager India- FedEx Trade networks