The shipping ministry will review the cabotage policy next year and introduce changes if Indian shipping lines have been adversely affected in the intervening period, Nitin Gadkari, the union minister for road transport, highways and shipping, said at an event in Mumbai on Monday. He was responding to concerns raised by Indian shippers about losing business after the cabotage rules had been relaxed.
In May, a shipping ministry order eased the so-called cabotage rule, which allows only Indian shipping lines to carry export-import containers for trans-shipment on local routes. Now, foreign-flagged ships are also allowed to pick up containers along the Indian coast to a trans-shipment hubs such as Singapore or return empty containers to these ports without any restrictions.
According to Gadkari, the cabotage rules were eased by the government because local shipping lines were unable to create a major trans-shipment hub in India, despite enjoying cabotage benefits that kept foreign liners out of the market.
“This lack of capacity meant that cotton produced in Gujarat has to be transported by road to Tamil Nadu even when empty shipping containers are moving from Kandla port (in Gujarat) to the trans-shipment hub in Colombo,” Gadkari said. This was not only a waste of resources but increased traffic on Indian roads and provided global trans-shipment hubs like Colombo over 70% of India’s trans-shipment business, the minister added.