The draft policy on coastal shipping that came out through a note from the Director General of Shipping early this week has brightened the prospects for wooing major shipping lines to the Vallarpadam International Container Transhipment Terminal.

Foreign lines

According to reports, the draft policy has indicated throwing open coastal shipping to containerised cargo, allowing foreign lines to carry container cargo along India's coast. Other items of cargo will remain reserved for Indian shipping lines.

Changes in Indian cabotage law, under which comes the regulation of Indian coastal shipping operations, have been at the centre of a debate eliciting different views on the future of coastal shipping business in the country.

While wooing foreign vessels to Vallarpadam, one of the points that has frequently been raised is the need for changes in cabotage law.

For the Vallarpadam terminal to develop into a truly world maritime hub, it is a must to relax the laws to allow foreign flag vessels to carry transhipment cargo between Indian ports.

The issue was raised in the Lok Sabha by Members of Parliament from Kerala, who sought relaxation in cabotage law to help the Vallarpadam terminal, due for inauguration later this year or early January.

The cabotage provision is section 407 Part XIV of Merchant Shipping Act of 1958, which stipulates that only Indian flag vessels can transport cargo originating in one Indian port and bound for another Indian port.

Those in favour of amendment to the cabotage law argued that transhipment containers coming from foreign countries and bound for other ports in India, and containers originating in other Indian ports and transhipped at Vallarpadam on their way to foreign countries cannot be treated as domestic cargo within the meaning of cabotage law.

They also raise the point that container terminal on Vallarpadam Island is housed within a Special Economic Zone and containers within the zone will not undergo Customs examination at Vallarpadam. Containers transhipped through Vallarpadam will undergo Customs examination only at the other Indian ports of origin or destination.

It was pointed out, for example, that a container originating in a foreign country, and bound for any port in India, might be transhipped at Vallarpadam.


However, the entire journey of the container to the Indian port had to be treated as one international movement.

It was also felt that the conditions in the Vallarpadam terminal should be at a par in competitiveness with those existing at international ports in the region like Colombo or Singapore.