Till now, DP World was trying to convince the government for easy passage of foreign vessels, saying that otherwise transhipment terminal could not reach full business potential. However, shipping ministry was unsure of making the move as that could hurt Indian shipping industry.
Section 407 and 408 of Merchant Shipping Act, 1958, deal with rules for entry of foreign ships in the country for movement besides Indian coasts. Section 407 of the Act says that no ship other than an Indian ship or a ship chartered by a citizen of India
or an Indian company shall engage in the coasting trade of India except under a licence granted by the director-general (shipping) under this section.
Similar laws exist in developed countries like the US.
In his interpretation of the law, Attorney General of India (AG) Goolam E Vahanvati has said the Act does not restrict coastal movement of foreign ships carrying export-import cargo. The interpretation has come after Cochin Port Trust, which hosts the transhipment hub at Vallarpadam, approached Vahanvati for legal advice.
Talking to FE, shipping secretary K Mohandas confirmed receipt of Vahanvatis opinion. We have received a legal opinion which says that domestic leg of export-import cargo movement is not part of coastal shipping. However, in practice we consider it as coastal shipping currently.
Cochin Port Trust chairman Paul Antony was not available for comment, while DP World could not be contacted immediately.
Transhipment terminals receive, stock and move containers from ship to ship before they head for their final destination. The first phase of the transhipment terminal, which commenced operations in February this year, has an annual capacity for handling one million twenty-feet equivalent units (TEUs) but the hinterland around Kochi contributes approximately three lakh TEUs of export-import containers per year, leaving a large capacity of the terminal unutilised.
Despite the legal opinion of Vahanvati, shipping ministry wants to retain the status quo for the time being. There are certain things that we have to consider before allowing free movement of foreign vessels, Mohandas said, refusing to give details of the options the ministry is onsidering.
DP Worlds terminal was built to prevent outgo of container cargo to neighbouring ports for transhipment. Shipping ministry data show over 45% Indian container trade makes its way through transhipment in Singapore, Malaysia, Colombo, Jebel Ali and Salalah. Colombo alone handles near 70% of Indias transhipment cargo.