Textile industry wants govt. to relax cabotage rule

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The textile industry in the south expects the Union government to soon come out with relaxation of cabotage rules for movement of cotton from Gujarat to Tamil Nadu by sea.

Coastal movement

In a recent representation to the Union government, the Southern India Mills’ Association (SIMA) said the Ministry of Shipping had taken several steps to enable coastal movement of cotton from Gujarat to Tamil Nadu.

Textile processing facilities are spread across clusters in different States and hence, transport cost is the key to determining the cost competitiveness of the industry.

Cabotage policies in India

The overall purpose of Cabotage rules are to prohibit foreign aircraft from one country traveling into another country and picking up foreign nationals or citizens of the other foreign country and providing transportation to and between points within that foreign country.

The current position on Cabotage in India

Cabotage refers to shipping along coastal routes between foreign sea ports, and also to the restriction on the operation of vessels between sea ports within a particular country.

The Indian Cabotage rules are  contained in Sections 406 and407 under Part XIV of the Merchant Shipping Act 1958 (the Act). In summary, pursuant to these Sections only Indian flagged vessels or vessels chartered by an Indian citizen or company, operating under a licence granted by the Director General of Shipping (Director General), can carry cargo from one Indian port to another Indian port. Foreign flagged vessels are permitted to carry cargo only if Indian flagged vessels are not available.

Three distinct types of license may be granted by the Director General:

  • A general licence;
  • A licence for the whole or any part of the coasting trade of India; or
  • A licence for a specified period or voyage

When granting a licence the Director General has the power to prescribe a specified period of validity and licence conditions.

It is important to note that these Sections do not provide for an absolute Cabotage regime since the discretionary powers granted therein are limited to of the provision of licenses by the Director General to Indian vessels with the caveat that the carriage of cargo by foreign vessels is permissible in certain circumstances where an Indian flagged vessel is not available.

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