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Business News/ Politics / Policy/  Private ports lobby seek change in new rules on cabotage relaxation
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Private ports lobby seek change in new rules on cabotage relaxation

The ports lobby said that the stringent and unrealistic conditions imposed for availing the relaxation would render the plan a non-starter

But even after cabotage is relaxed, it cannot be expected that foreign container lines will immediately start using the relaxation on a large scale, IPPTA said.Premium
But even after cabotage is relaxed, it cannot be expected that foreign container lines will immediately start using the relaxation on a large scale, IPPTA said.

Bengaluru: Indian private container ports and terminals have asked the government to amend new rules issued on 7 March to ease a so-called cabotage law for allowing foreign container lines to operate along the country’s coast saying that the stringent and unrealistic conditions imposed for availing the relaxation would render the plan a non-starter.

Only Indian registered ships are allowed to ply on local routes for carrying cargo, according to India’s cabotage law. Foreign container carriers have been lobbying the government to relax the law to allow them to operate along the country’s coast. This, according to lines, was essential as India seeks to set up transhipment hubs to reduce dependence on neighbouring foreign hubs to send and receive containers, entailing extra time and costs for exporters and importers.

Acknowledging the government’s initiative to ease cabotage restrictions for transportation of export-import (EXIM) loaded and empty containers on foreign container ships on local routes for aggregation of containers to facilitate transshipment, a private port lobby group has said that the plan will be a non-starter due to the stringent and unrealistic conditions attached for availing cabotage relaxation.

“The purpose behind the government’s objective of cabotage relaxation is to attract Indian containers transshipped through foreign hub ports to Indian ports. However, the conditions imposed for availing cabotage relaxation are so stringent and unrealistic that none of the existing ports/terminals/new ports will be in a position to meet them. Thus, the entire move will be a non-starter," the Indian Private Ports and Terminals Association (IPPTA) wrote in a representation to the shipping ministry, seeking a review of the new rules. Mint has reviewed a copy.

“Cabotage relaxation to be meaningful should be applied unconditionally at all the container handling ports at least for five years," IPPTA has suggested.

The main point of contention in the new rules relates to a stipulation that once cabotage relaxation is granted to an existing container handling port, it should be able to tranship at least 50% or more of the total containers handled during the first year while a new port will have to achieve this level in the second year after a gestation period of one year. Otherwise, the relaxation granted would be revoked and the port/s will not be considered again for such relaxation for the next three years.

A transshipment container is one that arrives in a port, for instance Mundra, on a ship, either from India or outside and is unloaded and then re-loaded onto another ship and taken out of Mundra to its destination, either in India or abroad.

But, even after cabotage is relaxed, we cannot expect that foreign container lines will immediately start using the relaxation on a large scale, IPPTA said. Many factors such as container volume available, depth restrictions, facilities available at the Indian transhipment hubs compared with those at nearby foreign transhipment hubs and regulatory issues will determine the deployment of foreign container ships for moving transhipment containers along the Indian coast.

Hence, sufficient time should be allowed for the cabotage relaxation policy to succeed. “We therefore suggest that there should be no stipulation as to the quantum of transhipment containers to be handled by a port in the first five years in order to avail cabotage relaxation and there should be a review thereafter," IPPTA wrote in the representation.

Shipping ministry said it had received the representation but declined to comment further.

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Published: 28 Mar 2016, 06:22 PM IST
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