Foreign registered container ships will soon be allowed to carry cargo in domestic waters if it is shipped in or out though the DP World-operated international terminal at Vallarpadam in Kochi. The Union Shipping Ministry will seek Cabinet clearance for the same.
According to the so-called cabotage law, India’s coastal trade is reserved for ships registered in India and foreign ships can be hired only when Indian ships are not available. However, the new relaxation would be made only in the case of Vallarpadam terminal.
After months of deliberations, the shipping ministry has got on-board other ministries such as defence, home, external affairs, finance, power and steel on relaxation of cabotage rules, a senior shipping ministry official said. Recently, while replying to a question in Parliament, the ministry had received representations both in favour and against the cabotage policy relaxation from various stakeholders.
“We are eagerly awaiting for the relaxation of cabotage rules for the success of the transshipment terminal. Indian tonnage is not sufficient to handle that cargo,” said Anil Singh, senior vice-president and managing director at the Dubai-based port operator DP World.
In its opinion on the issue, the Planning Commission had said relaxation should initially be made with respect to export/import containers at Vallarpadam international container trans-shipment terminal (ICTT) for three years after which a review may be undertaken for further relaxation.
Between June 2011 and 2012, ICTT handled around 300,000 twenty-foot equivalent unit (TEU) of cargo as against the estimated 750,000 TEUs.
One of the reasons for starting the ICTT was to compete with neighbouring ports, especially the Colombo port which handles much of India’s trans-shipment cargo. With China developing port facilities in Sri Lanka, experts say there is a growing concern in India over the handling of its cargo in the neighbouring (international) ports.
The issue of cabotage relaxation has been under discussion with the domestic shipping companies which fear losing business and a level-playing field. Several countries like the US and Japan have protected coastal shipping. The Indian National Shipowners Association has written to the shipping ministry, asking it to have stricter cabotage rules, such that only Indian flag vessels are allowed on the Indian coasts.