No coastal trade for foreign ships

Foreign flag ships and foreign-owned vessels may soon be barred from doing coastal trade along the Indian peninsula.

Foreign flag ships and foreign-owned vessels may soon be barred from doing coastal trade along the Indian peninsula. The ministry of shipping is considering a policy proposal that will bring this into effect during the next one year over growing security concerns on the countrys coastline and the need to give Indian ships additional opportunity to tide over the slowdown on account of the hit that international trade has taken after the global financial crisis.

The ministry is working on a draft Cabinet note to set cabotage rules that will prohibit foreign ships from moving from one port to the other along the Indian coastline. This provides foreigners vital and strategic information about movements,habitations and the nature of the coast between any two ports, a senior government official said. Cabotage refers to the transport of goods or passengers between two points in the same country.

The Merchant Shipping Act does provide for a right of first refusal (ROFR) to Indian owned and Indian flag ships for conducting coastal trade. The government is now planning to enforce this provision by way of formulating a stringent cabotage law to limit movement of foreign vessels.

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According to the steps being considered,a time line would be set for phasing out the movement of foreign tankers and off-shore vessels as there is adequate capacity for these in the Indian shipping industry. Indian shipping companies would also have to employ only Indian citizens on these vessels for the conduct of coastal trade. A time period of six to eight months is being considered for such ships to disassociate from the conduct of coastal trade, the official said.

However,there is a shortage of bulk carriers and dredgers in the country. To deal with this,cabotage laws would be enforced after assessing the time required by the Indian shipping industry to build adequate capacity so that trade is not disrupted,the official added.

Countries such as the United States ,China and Indonesia already have such restrictions in place. For instance,if a ship off-loads at New York it does not have the permission to skirt the coastline and deliver goods in Philadelphia.

The note,which is in its final stages,will also be sent to the ministries of defence and home affairs for their final views. Security of the Indian coastline has become a major concern for India in the aftermath of the 26/11 terror attack in Mumbai. The shipping minister has also been holding regular meetings with port authorities and security agencies to keep tabs on the movement and handling of cargo at major ports.