The Ministry of Shipping, as per its General Order No. 02 of 2018, has said that the provisions of sub-section (1) of Section 407 shall not apply to ships engaged in the coastal trade of India for carriage by sea of agricultural, fisheries, animal husbandry and horticultural commodities specified in the Indian Trade Classification (lTC) Harmonized System (HS) and modified by the Directorate-General of Foreign Trade, provided that the commodities specified contribute to at least 50 per cent of the total cargo onboard the ship.
Accordingly, a foreign flag ship is not required to obtain a licence from the Director-General of Shipping for engaging in the coastal trade of India for carriage by sea of agricultural, fisheries, animal husbandry and horticultural commodities.
The relaxation shall further be subject to the conditions that the information about the vessel and commodities will be submitted to the Director-General of Shipping. It must be shared with the authority by e-mail at sd3-dgs@nic.in at least 24 hours prior to the sailing of ship from the port in India. The prescribed format should be either digitally or otherwise signed by an authorised signatory of either the shipping line or the operator.
The relaxation shall also be subject to the condition that Indian law enforcement agencies, including inter alia the Navy, Coast Guard, State Maritime Police and Customs shall be allowed to board such ships any time in the sea for ascertaining the bonafide credentials of the said ships/crew.
Elaborating on the background, the Order said that to enhance farmers’ income, there is the related need to enhance their selling volume, which can be achieved only by enabling a large part of the produce to reach markets and be monetised, besides opening up the country as one market with eased access.
It is the stated intent of the government to bring about a mindset shift from facilitating and protecting agricultural trade at pre-defined locations accessible to farmers, towards one that expands the market ecosystem, encompasses a wider array of participants and empowers farmers to access locations further afield.
Also, the transport connectivity and logistics infrastructure needs to enable farmers and logistics service providers to store and transport these products, especially perishable products, to serve the domestic consumption and export markets efficiently.
The National Perspective Plan of the Sagarmala programme estimates a potential of more than 9 million tonnes per annum for coastal movement of food grains and processed food.
The Order points out that waterborne transportation modes, including coastal shipping, being comparatively cheaper, would enable farmers to access a larger market profitably, widen the range of goods which can be marketed, and lengthen the distances over which domestic trade can be conducted.
It says that the persistence of unidirectional demand in India has led to insufficient investment in the fleet and, as a result, inadequate availability of coastal vessels for providing reliable and time-bound services to Indian ports. Therefore, providing for two-way cargo movement has the potential to reduce the cost of transport, improve cargo volumes and facilitate investment in fleet.
The impediment till date was that as per the existing regulatory framework, a foreign ship can load cargo from one place or port in India and discharge at another place or port in India only under a licence issued by the Director-General of Shipping under Section 407 of the Merchant Shipping Act, 1958.
This needed to change as promotion of trade and ease of doing business in India are the major thrust areas of the government. Hence, there was the need to simplify processes for shipping of cargo and operation of vessels, the Order explained.
