The proposed law seeks to exempt Indian flag ships from licensing requirements for operating along the country’s coast. Chapter 4, Clause 10 of the Coastal Shipping Bill which deals with ‘Licensing of chartered vessels other than for coasting trade’ covers all sea going vessels, chartered by a citizen of India or a non-resident Indian or an overseas citizen of India, or a company or a co-operative society or a limited liability partnership or any other entity specified by the Central government, proceeding to sea from a port or place in India, to a port or place outside India; or outside India, to a port or place in India or outside India. Further Clause 11 states that “no vessel, other than an Indian vessel, chartered by a citizen of India or a non-resident Indian or an overseas citizen of India or a company or a co-operative society or a limited liability partnership or any other entity as the Central Government may, by notification specify in this behalf, shall be taken to sea from a port or place within India or outside India, except under a licence granted by the Director General (of Shipping)”.

In effect, an Indian entity – a citizen, company, co-operative society, LLP, NRI and OCI - will have to take a license for chartering a foreign flag ship to operate along the coast, for bringing cargo into India (import), for taking cargo out of India (export) and also for transporting cargo between two foreign ports under the Coastal Shipping Bill, when it is ratified by Parliament and signed into law.

To be sure, government officials explained that this condition currently prevails in the existing Merchant Shipping Act 1958.

“It is the same; there is no change,” an official involved in drafting the Coastal Shipping Bill, said. The Coastal Shipping Bill 2024 was drafted by carving out Part 14 of the Merchant Shipping Act, 1958 into a separate legislation to help the government make focussed policy decisions and give impetus to coastal shipping. The new Merchant Shipping Bill 2024, which is also awaiting Parliament nod, will only deal with ship registration, survey and certification. The trade part will be covered in the Coastal Shipping Bill which deals with both coastal shipping and export-import (EXIM) trade, the official said. If a foreign flag vessel is chartered by an Indian entity for coastal and overseas operations, then a license is required because he is an Indian citizen, the official said.

“If some accident happens, then there will be questions on the role of flag state, port state, who is the owner of the cargo and who is the charterer. Even today it is like that in the Merchant Shipping Act. There is no change,” the official noted.