The Coastal Shipping Bill, 2024: A Step Towards Boosting India’s Maritime Economy
Introduction:
The coastal trade is the backbone of the Indian economy. Almost 95% of the country’s merchandise trade is transported through sea routes. The nation is blessed with a 7,516-kilometer coastline and 229 ports,[1] which help in low-cost transportation and regional connectivity. There, however, are significant hindrances in the sector emanating from outdated regulations of acts dating back to 1838, the Coasting Vessel Act 1958, the Merchant Shipping Act. These laws create much red tape that limits participation in the sector by domestic players and stifle growth.
This Act provides some critical objectives to be fulfilled: to enhance coastal trade, connectivity between states, and encourage participation from domestic forces within the maritime industry. The Coastal Shipping Bill 2024 is going to unlock complete potential of India’s coastal shipping industry by streamlining regulations and offering operational incentives. This is an effort that will surely help bring in more economic growth along with national security through smooth movement of goods along the coastline.
Table of Contents
Key Provisions
Chapter I: Preliminary
The introductory part establishes the scope and extent of the Bill. The Act applies to all ships engaged in coasting trade, Indian and foreign chartered ships sailing in the Indian coastal waters. It introduces significant definitions of “coasting trade,” “coastal waters,” and “vessel,” which become a basis for clear interpretations and uniformity.
Chapter II: Prohibition and Licence for Coasting Trade
This chapter requires that only Indian vessels are permitted to conduct coasting trade unless a specific license has been granted by the Director-General. It states the process of application, conditions under which licenses are granted, and factors taken into consideration such as citizenship of the crew, safety of the vessel, and compliance with strategic plans. The Director-General is authorized to suspend, cancel, or alter licenses in case of non-compliance or breach.
Chapter III: Strategic Planning and Database
It also introduces the establishment of a National Coastal and Inland Shipping Strategic Plan, refreshed biennially. These will indicate where improvements are to be made, new route development, and integration measures involving coastal shipping and inland waters. A National Database for Coastal Shipping shall also be established to make the exercise transparent, as it captures data on routes, license, and compliance in all operations, and shall be open to public access.
Chapter IV: Licensing of Chartered Vessels Other Than for Coasting Trade
Scope and Applicability
This chapter applies to sea-going vessels let by Indian citizens, Overseas Citizens of India, and any other entity, let out between Indian ports to and from international destinations. This section requires a valid license from the Director-General as prescribed under the Security and Maritime Standards in which all the general and specific licenses have conditions intended for the safety and efficiency of voyage operations. By setting up these regulations, the chapter guarantees controlled and legal maritime trade, protecting India’s security and operational interests.
Important Provisions
1. License Requirement:
All foreign chartered vessels, except Indian vessels, coming or going to or from Indian ports shall obtain a license from the Director-General as required under this chapter. However, vessels wholly chartered by an Overseas Citizen of India for operations carried out wholly outside India are exempted from the requirement of obtaining a license
2. Kinds of Licenses:
General licenses are designed for broader and long-term operations, allowing for more extensive and ongoing activities. In contrast, voyage-specific licenses are granted for particular voyages or for a limited time, focusing on short-term and specific missions.
3. Application Process:
Applications must be submitted in a prescribed form, accompanied by a fee, and meet specific criteria outlined in the rules. The application process ensures transparency and adherence to regulatory requirements.
4. Conditions and Validity
The license outlines its form, period of validity, and the operational conditions that must be adhered to. Additionally, the Director-General has the authority to impose extra conditions if deemed necessary, based on factors such as safety, security, or other relevant considerations.
5. Suspension, Revocation, or Modification:
The Director-General can suspend, revoke, or amend a license when the license conditions are violated, when the vessel is operated in a manner that goes against public or maritime interests, or if necessary information or compliance is not provided. However, before any such action is taken, the affected licensees are provided with a fair hearing for procedural justice in the process of making the decision.
6. Return of Expired or Revoked Licenses:
Licenses that have expired should be returned to the Director-General promptly. This ensures there are no unauthorized vessel operations, and proper oversight is also provided.
There, however, are significant hindrances in the sector emanating from outdated regulations of acts dating back to 1838, the Coasting Vessel Act and 1958, the Merchant Shipping Act. These laws create much red tape that limits participation in the sector by domestic players and stifle growth.
The main objectives of the Coastal Shipping Bill, 2024 are to promote coastal trade, improve connectivity among states, and encourage domestic participation in the maritime sector. It is going to unlock the complete potential of India’s coastal shipping industry by streamlining regulations and providing operational incentives. The initiative promises to enhance economic growth and national security as it ensures efficient movement of goods across the coastline.
7.Port Clearance:
Under this chapter, no port clearance can be given by the customs officers to vessels without having a valid license. This provides strict observance of the licensing regime.
Chapter V: Offences and Penalties
Coverage
This chapter brings out a comprehensive penalty regime in order to ensure compliance with the provisions of the Coastal Shipping Bill. It outlines offenses, prescribes penalties, and provides mechanisms for compounding offenses, creating a deterrent against violations.
Key Provisions
1. Unauthorised Coasting Trade:-
Carrying on coasting trade without a valid license as required under Chapter II shall be punished with imprisonment for a term which may extend to six months, or with fine which may extend to ₹15 lakh or four times the value of fees or commissions received and/or with both and the vessel shall be liable to detention under Section 29.
2. After License Expired or Revoked
Continuing operations after a license has become or been declared void as such results in penalties to include imprisonment for up to six months and a fine of up to ₹10 lakh or double the fees earned during unauthorized operation. 3 Taking the Vessel to Sea without a License:
Any vessel brought to sea without a license is liable to imprisonment for six months or fine of ₹15 lakh or four times the fees earned during unauthorized operation.
3. Failure to Furnish Information or False Reporting:
Licensees or agents who fail to supply the information requested or furnishing false information shall be liable to imprisonment for six months or fine of ₹50,000.
4. Violation of Detention Orders:
Detaining a vessel as a result of a detention order and then sending it to sea exposes a person to imprisonment for six months and a fine up to ₹15 lakh
5. Illegally detaining authorized personnel:
Any officer authorized to inspect or detain a vessel and is detained, assaulted, or otherwise subjected to any injury is dealt with imprisonment for six months, and a fine upto ₹1 lakh along with recovery of any incidental expense
6. Other Violations and Penalties:
Other violations carry a penalty of up to ₹1 lakh for false or misleading reporting, up to ₹10 lakh or double the fees earned for breach of license conditions, and penalties ranging from ₹5 lakh to ₹15 lakh for failure to comply with the directions of the Director-General or Central Government orders.
7. General Provision for Unspecified Offenses:
For offenses not specifically covered by the regulations, a fine of up to ₹1 lakh applies, with an additional daily fine of ₹5,000 for continuing violations.
8. Compounding of Offenses:
Minor offenses can be compounded by designated officers who can accept a fee in lieu of prosecution, though compounding is barred for repeat offenders, thus ensuring a stern approach towards habitual violators.
9. By Companies:
If an offense is committed by a company, its officers-in-charge can also be liable unless they prove there was due diligence. Directors, managers or partners involved in the giving of consent or in the connivance that resulted to an offense are equally held liable.
10. Power to Detain Vessels:
Naval officers, coast guards, customs officials, and port authorities are tasked to detain vessels violating provisions under the Act.
10. Jurisdiction and Legal Proceedings:
Offenders can be prosecuted anywhere the Central Government might determine or where the offence occurs. Foreign vessels and consulates must be given proper notice, especially in case of litigation or detention.
Conclusion
Coastal Shipping Bill 2024 is that much-needed initiative that promises to rejuvenate India’s coastal trade sector. The Bill encourages more domestic shipping participants by modernizing outdated rules and simplifying licensing practices, thereby contributing to stronger economic growth and national security. The bringing together of coastal shipping with inland waterways, along with the development of a strategic plan and database, has ensured improved efficiency and openness. The introduction of severe penalties for violations and accountability provisions supports a robust regulatory framework as well. Ultimately, the Coastal Shipping Bill, 2024 is set to unlock the full potential of India’s maritime trade, promoting economic development, reducing logistics costs, and enhancing the country’s competitiveness in global trade.
[1] Invest India, 2024. Opportunities for Export-Oriented Businesses in India. [online] Available at: https://www.investindia.gov.in/blogs/opportunities-export-oriented-businesses-india [Accessed 19 December 2024].
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