A Bold Step Forward
It has been a "to be or not to be" moment for successive governments as far as relaxation of cabotage law is concerned. Lot of studies, debates and brain storming has been done over the years into assessing the pros and cons of allowing foreign lines to charter on Indian coast to move cargo among domestic ports. More than the technical or implementation hurdle, it was more of the inner fight, whether to open up the last frontiers of maritime trade to the foreign lines or to keep it reserved for Indian flag carriers.
Had it been in any other industry the outcome would have gone in favour of nationalistic sentiment, but as they say in global trade and open economy, market forces take the final call. In EXIM trade every penny counts, and exporters and importers try to squeeze the most value for their money as they compete globally. Even though Made In India goods are par excellence compared with products of any country, logistics costs and efficiency are areas where exporters are losing to their counterparts from other countries. One classic example has been Chittagong, Kolkata and Chennai Ports which despite having surplus inventory of empties couldn’t move the boxes directly to any Indian port and it has to go back to a transshipment port before it could be brought to another Indian port. During peak season or festive times the practice has turned out to be nightmare for exporters as well as carriers including whoever involved. There couldn’t be a better time to have this decision. The wait has been bit long than expected but all is well when it ends well. People outside the maritime trade might not realize the importance of this single most important policy change in the history of Indian shipping, but it is no less a historic moment than the early 90s when India opened its economy to the world or the country adopted an ‘Open Sky’ policy. Nevertheless the policy makers have delivered, and it is time for the foreign carriers, ports, terminals and other stakeholders of the EXIM freight forwarding community to come together to deliver upto the expectation. India has already made a steady progress on the global logistics index, and hopefully the latest policy intervention would further cement India’s position as a global cargo hub. Nevertheless foreign carriers now free to move on coastal route would also free up space for Indian carriers to cater to the domestic cargo which is a positive sign for coastal shipping. Now time will reveal how this would result in increasing India's transshipment volumes, contributing to the savings. But definitely cost will come down because of empty repositioning and coastal movement.
Time will reveal how this would result in increasing India's transshipment volumes.