The government has drafted a Bill to oversee India’s coastal shipping sector, which seeks to give a “legal structure” to the right of first refusal (RoFR) granted to local fleet owners operating their ships between ports in the country.

The Coastal Shipping Bill 2020 has been drafted by carving out chapter 14 of the Merchant Shipping Act 1958, which deals with grant of licences for coasting trade in India.

A couple of years ago, the government exempted Indian vessels from obtaining any kind of licence for coasting trade; their registration was considered as a licence.

“Now, there is a thought that we should have a proper coastal shipping strategy. Earlier, the right of first refusal rule was actually an executive order based on Chapter 14, which said that the Directorate General of Shipping (DG Shipping) can set conditions for grant of licence. Butthose conditions should ideally have been conditions on the vessel but we put it in the business clause, basically saying that you first look at Indian vessels and if Indian vessels are not available only then you can apply for a licence to use foreign ships for coastal trade,” D G Shipping Amitabh Kumar told BusinessLine.

“We want to legalise this whole set up now; it needs to be given a legal structure. So, it has been decided that we will remove chapter 14 from the MS Act and convert it into a new act, which will be called the coastal shipping act. The other executive orders also, which we had issued allowing inland vessels to come on coastal route, all those things will be legalised with this Act,” he stated.

RoFR will not be in the proposed Coastal Shipping Act, but the fact that the Central government or the DG Shipping can issue orders to give preference to Indian built or Indian flag vessels, those will be part of the Act. That is not there in the part 14 of the MS Act, Kumar said.

The Bill has provisions that empowers the Central government or the DG Shipping to give preference to ships on the basis of age, built, flag.

“Larger picture is that there should be a proper policy for coastal shipping, and there should be statistics on availability of tonnage for coastal shipping activities and, if necessary, we should give protection to Indian built and Indian flag vessels,” he added.

Source: The Hindu Businessline