The shipping ministry is preparing a blueprint to bar foreign vessels in domestic coastal trade. By doing so, the ministry wants to increase business flow to Indian carriers and reduce the chances of misuse of the country?s coastal waters for terrorist activities.
Currently, foreign vessels can?t operate in those segments of coastal trade in which a sufficient number of Indian carriers are available. In other segments too, foreign companies have to take a prior permission from shipping regulator directorate general of shipping (DGS).
?We are moving towards a situation where no foreign vessel will be allowed to operate in India for coastal trade,? a senior official in the ministry, who is involved in making the blueprint, told FE. The step has been taken after complaints of losing business to foreign companies from the Indian National Shipowners? Association (INSA). Chennai-based Caravel Logistics Pvt Ltd was earlier looking at hiring a foreign vessel. Coastal shipping accounts for up to 3% of the total tonnage in the shipping sector and about 50% of this is carried by foreign vessels.
?The Merchant Shipping Act, 1958 allows entry to foreign vessels on a case-to-case basis. However, the contractors often draft the tender in a manner which suits the foreign vessels more than the Indian ones. We want that the Indian ships should be given first preference, at least in areas where we have the required capacity,? said Sudhir Rangnekar, CEO, INSA.
Such a change of rules will prove to be a spoiler to the plans of firms like Malaysia?s AET Tanker Holdings Sdn Bhd, which have applied to DGS for the permission to start oil shipping in India. ?Some months ago, AET submitted to the office of the director general of shipping an application to register a vessel in India. In view of the fact that the application is currently under consideration, it is inappropriate for AET to make any comment at this stage,? Paul Lovell, AET?s head (customer partnerships and corporate communications) said.
The step is in line with the practice followed in several countries like the United States, Indonesia and Malaysia. The United States has the strictest law on the subject, which requires all commercial vessels, transporting merchandise between ports to be built, owned, operated and manned by US citizens and to be registered under the US flag. ?We will do this in a phased manner. At first, we are stopping the entry of foreign vessels in bulk carriers and tankers along with certain other segments where we have enough numbers. We cannot do this in export-import trade because our carriers are allowed to go to other countries. But in coastal trade, when other countries have stopped foreign entry, we should not be apologetic in doing the same. It is in our long-term interest,? the official said.
Till the end of December 2008, India had 615 vessels for coastal trade. Of these, 11 were dry cargo bulk carriers of 3,62,923 dead weight tonne (dwt), 12 were product tankers of 66,123 dwt and two were crude oil tankers of 82,246 dwt.
In order to ensure legal validity of the new rules and avoid their intersection with the provision related to World Trade Organisation, the shipping ministry will also involve the ministries of law and commerce, the official said, adding that the change can be brought in just by revising the guidelines on coastal trade by the DGS, which does not need any Cabinet approval. ?We want to do it as fast as possible,? he said.
Besides adding to the business of domestic carriers, such a provision would minimise the possibility of using the coastal waters of the country for any terrorist activities. Incidentally, terrorists attacked Mumbai last year after reaching the financial capital of the country through the sea route. ?This is a major step after last year?s attack in Mumbai,? another official of the ministry said. However, he said that DGS has to balance the new norms to avoid hijacking of coastal trade by Indian shipowners.
