The rule, which takes effect next month, has alarmed the shipping industry which fears that hundreds of foreign chartered vessels and small local ships may be barred from Indian ports because they are not insured by one of 13 firms approved by the government.

Shipping industry officials warn the new rule could disrupt India's exports.

India has about 7,500 km (4,690 miles) of coastline with 12 major ports, according to the ministry Web site. The ports handled 458 million tonnes of cargo in 2003/04 and ocean freight accounts for about 70 per cent by value of the country's trade.

"We're right now examining how to liberalise the stipulations for the time being," A K Mahapatra, the most senior civil servant in the Shipping Ministry, said, though he said reports that exports would be hit were 'a little alarmist and highly exaggerated'.

The new rule was announced last September and aims to prevent the government having to pick up the bill for clearing wrecked ships from Indian waters.

Mahapatra said Indian ports suffered heavy financial costs because vessels arriving without protection and indemnity cover from government-approved insurers posed a problem if they sank.

"This is becoming a problem for some (shipping firms). Several have taken protection and indemnity cover from (the approved) insurance companies and some have sought time. So, in the interim, we're examining how to liberalise the stipulations," he said.

Nearly 15 per cent of the ocean freight to and from India is carried aboard Indian ships and 85 percent by foreign vessels.

Industry officials say that every day 8-10 foreign vessels apply to operate ships in Indian ports.

S S Kulkarni, secretary general of the Indian National Shipowners' Association (INSA), told Reuters INSA was pressing the government to suspend the rule for at least six months.

Under the rule, foreign vessels insured by firms not on the government's list would not be able to enter Indian ports. INSA wants the list to be extended.