Legislative Brief For The Coastal Shipping Bill, 2025
The Coastal Shipping Bill, 2024 (‘the Bill’) builds upon Part XIV of the Merchant Shipping Act, 1958, to establish a distinct regulatory framework for the coastal shipping sector.
Key Takeaways
The Coastal Shipping Bill, 2024, aims to establish a dedicated regulatory framework for coastal shipping, separating it from the Merchant Shipping Act, 1958. Key provisions include defining 'service' in coasting trade, exempting Indian vessels from mandatory licensing, supporting Indian seafarers and shipbuilding, creating a strategic coastal shipping plan and database, updating fines for modern compliance, and empowering the Director-General for vessel operations and environmental safety. The Bill seeks to modernise the sector, promote ease of doing business, and enhance India's maritime infrastructure while fostering private sector participation and environmental sustainability.
The Bill may be criticised for undermining the power of the State Governments. There might also be concerns about its lack of specific provisions to address environmental challenges, arguing that it does not sufficiently prioritise eco-friendly practices in the maritime sector.
However, such criticisms are devoid of any merit, considering that the Government has formulated the Bill in such a way that it balances national and state interests, preserving state jurisdiction over minor ports while enhancing coordination for interstate and international coastal shipping. Environmental concerns are addressed through a provision enabling the Director General to act in order to protect the environment and sea life, adoption of clean energy, and initiatives like the Green Ports Initiative and National Coastal Mission. These measures demonstrate the Government’s commitment to sustainability while fostering economic growth in the maritime sector.
Brief About The Bill
The Coastal Shipping Bill, 2024 (‘the Bill’) builds upon Part XIV of the Merchant Shipping Act, 1958, to establish a distinct regulatory framework for the coastal shipping sector. Recognizing its strategic importance to the Indian economy, the Bill aims to decouple coastal shipping from the Merchant Shipping Act to simplify regulatory processes and enhance accessibility within the industry. By addressing existing challenges and aligning with contemporary maritime needs, the Bill seeks to enhance India's coastal shipping infrastructure and encourage sustainable growth in the maritime sector.
The Bill aims to position domestic coastal shipping as a competitive alternative to road and rail, aligning with the larger goal of reducing logistics costs. The Bill seeks to streamline the domestic shipping sector by removing the requirement for Indian-flagged vessels to obtain a licence for operations in coastal waters. The provisions introduced for foreign vessels aim to create significant job opportunities for Indian seafarers, supporting India's position as a key global contributor to the maritime workforce. This ensures that foreign vessels also contribute to enhancing employment for Indian nationals in the shipping sector. Additionally, the Bill would enable coastal vessels to operate on inland waterways and proposes the establishment of a comprehensive coastal shipping database to enhance sectoral efficiency.
Background And Context
India being the 16th largest maritime nation globally, handles 95% of its trade by volume and 70% by value through maritime channels. The country ranks third in the world in ship recycling by tonnage, underlining its significant role in the global maritime industry. With a 7,500 km coastline and access to the sea on three sides, India boasts 12 major ports and 200 minor ports. Major ports fall under the administrative control of the Ministry of Ports, Shipping and Waterways of the Government of India, while minor ports fall under the jurisdiction of State Maritime Boards of respective state Governments and this also includes private ports running under the public–private partnership (PPP). Shipping has long been regarded as a vital transport sector, particularly for bulk cargo, due to its cost-effectiveness and strategic importance, especially during times of emergency.
Shipping, a key component of India's transport infrastructure, serves as an economical and complementary mode of transport. It supports various ancillary industries, including shipbuilding, shipbreaking, and ship repairs, generating significant employment opportunities. In line with the Government's vision for sectoral growth, shipbuilding clusters are being proposed in five states: Maharashtra, Kerala, Andhra Pradesh, Odisha, and Gujarat, reflecting the Government's focused investments in the maritime sector. The Bill, recognizes the strategic importance of this sector and aims to streamline the regulatory framework governing coastal shipping in India. By addressing existing regulatory bottlenecks, the Bill aims to bolster India’s shipping industry, contributing to the Government's goal of doubling container-handling capacity within the next five years. This growth is projected to create an estimated 20 lakh jobs, further strengthening the nation’s maritime economy.
India’s maritime sector has seen significant growth, with the national fleet increasing steadily. As of June 2024, there are 1,530 Indian-flagged vessels with a total GT of 13.7 million. This growth indicates a shift toward greater reliance on Indian-flagged vessels, which are increasingly competitive in both domestic and international markets. The Bill is expected to enhance this trend by streamlining regulations, reducing bureaucratic barriers, and fostering greater participation from domestic shipping operators in both coastal and global trade. The Bill is poised to strengthen the sector's regulatory framework, drive growth, and improve the overall efficiency of coastal shipping in India.
Key Legal Provisions
Inclusion Of ‘Service’ Under The Definition Of ‘Coasting Trade’: Clause 2(1)(a) of the Bill includes the term 'service' in the definition of ‘Coasting trade’. This term encompasses activities such as exploration, exploitation, research, and other commercial operations in coastal waters, excluding the transportation of goods and passengers. This expansion ensures offshore vessels providing services, rather than transporting goods or passengers, are now covered under the Bill.
Removal Of The Mandatory Licensing Requirement For Indian Vessels: Clause 3 of the Bill mandates that vessels engaging in coasting trade within coastal waters must obtain a license from the Director-General, except for Indian vessels. This provision regulates trade, strengthens maritime security, and ensures national standards, while offering operational flexibility to Indian vessels to support domestic maritime activities.
Promoting Indian Seafarers and Shipbuilding through Licensing: Clause 4 of the Bill requires applications for coasting trade licenses to be submitted to the Director-General, who will consider factors such as compliance history, crew citizenship, vessel specifications, safety, security, route availability, and operational efficiency. Licenses are issued with prescribed conditions and validity, aiming to support Indian seafarers and promote shipbuilding in India.
Preparation of a National Coastal and Inland Shipping Strategic Plan: Clause 8 of the Bill mandates the Central Government to publish a National Coastal and Inland Shipping Strategic Plan within two years. The plan will assess coastal routes, forecast traffic, and suggest improvements. A committee with maritime and port authority representatives will draft the plan, which will be updated biennially and made publicly available on the government website.
Creation of a National Database for Coastal Shipping: Clause 9 of the Bill requires the Director-General to maintain a National Database of Coastal Shipping, containing details such as license applications, granted licenses, routes, and revoked licenses. The database will be accessible through an electronic portal, updated monthly to ensure transparency and provide the public with up-to-date coastal shipping information.
Improved Penalties and Fines: Clause 15 to 28 of the Bill update fines and penalties for violations in the Bill to reflect current maritime practices, addressing issues not covered by the outdated Merchant Shipping Bill. The revisions aim to strengthen deterrence and improve enforcement by aligning penalties with modern shipping's financial realities, ensuring more effective compliance and accountability within the industry.
Empowering the Director-General to Direct Vessel Operations: Clause 35 of the Bill empowers the Director-General to issue orders concerning licensed vessels, including setting ports, routes, cargo restrictions, and safety measures. The Clause also gives the Director-General authority to act in the interest of marine life and the safety of the environment. This Clause also ensures national interests, such as defense and maritime security, are protected. Additionally, the Director-General may require vessel owners to provide relevant information, improving oversight and regulation of shipping activities in the public interest.
Frequently Asked Questions (FAQs)
What is the rationale behind this Bill?
The rationale behind the Coastal Shipping Bill, 2024 lies in the Government's aim to modernise and boost the coastal shipping sector, which plays a vital role in India's trade and transport infrastructure. Coastal shipping offers a cost-effective and environmentally friendly mode of transport, particularly suited for bulk goods. Strengthening this sector is critical to reducing reliance on road and rail networks, thereby decongesting them and lowering overall logistics costs. The Bill replaces Part 14 of the Merchant Shipping Act, 1958, addressing the need to simplify outdated and cumbersome regulations. By making coastal shipping operations more accessible, it promotes ease of doing business and encourages greater participation from domestic stakeholders. Removing the requirement for Indian-flagged vessels to obtain a general trading licence for coastal operations is a key step in levelling the playing field for domestic operators, fostering competitiveness within the sector.
Aligning India's coastal shipping regulations with international standards is another core objective of the Bill. This ensures that Indian vessels are better equipped to compete in global markets while adhering to stringent safety, security, and environmental protocols. Additionally, the Bill facilitates integration with inland waterways, enhancing connectivity and reducing transport costs for both domestic and international trade, thereby boosting economic efficiency. The Bill aligns sectoral growth with broader environmental sustainability goals, ensuring that economic development does not come at the expense of ecological balance.
The Government envisions coastal shipping as a driver of employment and economic growth, given its close association with ancillary industries such as shipbuilding, shipbreaking, and repairs. The Bill seeks to unlock the sector’s potential to contribute to India's "Blue Economy" and create significant job opportunities. Furthermore, the establishment of a comprehensive Coastal Shipping Database under the Bill will enable better monitoring, resource optimization, and informed policymaking. In essence, the Coastal Shipping Bill, 2024 aims to eliminate long standing bottlenecks, enhance domestic capabilities, and position India as a leader in the global maritime sector while addressing economic, environmental, and infrastructural priorities.
What are the existing legal provisions governing the shipping sector?
The legal framework governing the shipping sector in India encompasses various laws, rules, and regulations designed to oversee maritime trade, safety, security, and environmental compliance. The key legal provisions include:
Merchant Shipping Act, 1958
The primary legislation governing the shipping industry in India. The Act covers registration, certification, and safety of ships; prevention of maritime pollution; and welfare of seafarers. It is divided into parts addressing coastal shipping, inland navigation, and international maritime standards. The Act mandates compliance with international conventions like SOLAS (Safety of Life at Sea), MARPOL (Marine Pollution), and COLREG (Collision Regulations).
Indian Ports Act, 1908
The Act regulates the administration of ports and their infrastructure. It defines the roles and responsibilities of port authorities. It provides guidelines for port operations, safety, and the collection of tariffs.
Major Port Authorities Act, 2021
The Act replaces the Major Port Trusts Act, 1963. It aims to modernise port governance by granting greater autonomy to major ports. The Act encourages private investment and promotes efficiency in port operations.
Inland Vessels Act, 2021
The Act governs inland water transport and repeals the Inland Vessels Act, 1917. It provides a unified regulatory framework for the registration, operation, and safety of inland vessels. It aims to promote the seamless movement of goods and passengers across states.
How Does the Coastal Shipping Bill, 2024 Address Environmental Sustainability?
The Coastal Shipping Bill, 2024 incorporates comprehensive measures to ensure environmental sustainability while fostering the growth of India’s maritime sector. Recognizing the importance of balancing economic progress with ecological responsibility, the Bill includes specific provisions aimed at reducing carbon emissions, protecting marine biodiversity, and promoting clean energy adoption.One of the key provisions of the Bill is the authority given to the Director-General to take necessary actions to safeguard the environment and marine life. This ensures that coastal and marine ecosystems are protected from potential hazards caused by shipping activities, including pollution, oil spills, and habitat degradation. Additionally, the Bill aligns with existing national frameworks such as the National Coastal Mission, which focuses on coastal conservation, disaster risk reduction, and the sustainable use of marine resources. To further enhance sustainability, India’s ports are increasing their renewable energy share, with a target to boost green energy adoption by 60%. Several green shipping initiatives are being implemented, including the development of Hybrid Electric Ferries, Zero-emission vessels, Electric Water Taxis, and LNG-powered cargo carriers. These advancements are being spearheaded by Cochin Shipyard Ltd., India’s largest shipbuilding and maintenance facility, which is actively working on pilot projects involving Hydrogen Fuel Cell Ferries, Hybrid Electric Ro-Ro vessels, and Hybrid Tugs. By integrating these eco-friendly policies and prioritizing infrastructure upgrades, the Coastal Shipping Bill, 2024 aligns with global environmental standards, such as those set by the International Maritime Organization (IMO). The government’s proactive approach ensures that India’s maritime sector transitions towards cleaner fuels like LNG, significantly reducing carbon footprints and marine pollution.These initiatives collectively support the development of a sustainable blue economy, ensuring that environmental conservation remains at the core of India’s maritime policies while fostering long-term economic growth.
How is the Bill in consonance with India's Maritime Amrit Kaal Vision 2047?
The Amrit Kaal Vision 2047, formulated by the Ministry of Ports, Shipping & Waterways, builds on the Maritime India Vision 2030 and aims to develop world-class ports and promote inland water transport, coastal shipping, and a sustainable maritime sector. It encompasses aspirations in Logistics, Infrastructure, and Shipping, supporting India's 'Blue Economy'. The vision, shaped through over 150 consultations with various stakeholders and the analysis of 50 international benchmarks, outlines more than 300 actionable initiatives for enhancing ports, shipping, and waterways by 2047. The Coastal Shipping Bill, 2024, is a significant step in realizing India’s Maritime Vision 2047, a framework to position India as a global maritime leader. This vision emphasizes sustainability, economic growth, enhanced connectivity, and robust regulatory mechanisms, all of which find resonance in the provisions of this Bill.
The Bill promotes the seamless integration of coastal shipping with inland waterways, a core component of the vision to reduce logistics costs and boost economic efficiency. By creating a unified regulatory framework, the Bill ensures smoother operations across maritime and inland transport networks, enhancing India’s competitiveness in global trade. In line with the Aatmanirbhar Bharat initiative, the Bill incentivizes domestic shipbuilding and repair industries, fostering self-reliance in maritime capabilities. This aligns with the vision’s goal of making India a hub for shipbuilding and ancillary industries by 2047, reducing dependency on foreign players and boosting domestic employment. Furthermore, the Bill is expected to catalyze economic growth by addressing regulatory challenges and facilitating private sector investments. This is in sync with the vision’s target of creating millions of maritime-sector jobs and doubling container handling capacity, thus cementing India’s role as a maritime powerhouse.
In conclusion, the Coastal Shipping Bill, 2024, builds upon the Government’s ongoing efforts to modernize the maritime sector and aligns seamlessly with the long-term objectives of Maritime Vision 2047. By fostering connectivity, sustainability, and economic resilience, the Bill strengthens India’s maritime foundation for decades to come.
Does the Bill allow foreign entities to register ships in India?
No, the Merchant Shipping Bill, 2024 does not permit the registration of ships owned exclusively by foreign entities. Instead, it establishes a structured framework allowing Indian entities, including Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs), to register vessels under clearly defined ownership criteria. The Bill aims to expand India’s merchant fleet while ensuring national sovereignty over its shipping sector. By streamlining the registration process and making it more flexible for Indian stakeholders, the Bill encourages greater domestic participation in the global shipping industry. It also brings India’s maritime laws in line with international best practices and conventions, helping Indian shipping companies compete effectively on a global scale. Furthermore, while a vessel’s country of registration (flag state) is not always linked to the nationality of its owner, the Bill ensures that Indian-registered ships remain under Indian regulatory control, safeguarding national interests while enhancing India’s presence in global maritime trade.
How has the shipping sector been improving under the Modi Government?
Under the Modi Government, the shipping sector has witnessed substantial investment aimed at modernising infrastructure and enhancing operational efficiency. The Sagarmala Programme, launched in 2015, has been a flagship initiative, focusing on port modernization, connectivity enhancement, port-linked industrialization, and coastal community development. As of 2024, over 800 projects have been identified under the program with an estimated cost of ₹5.5 lakh crore, reflecting the Government’s commitment to transforming the sector into a global leader.
The Government has prioritised the growth of transportation through Inland Waterways and significant progress has been made in freight transportation through inland waterways during the last ten years. Cargo movement on National Waterways has increased from 18.10 million tons in 2013-14 to 133.03 million tons in 2023-24, at a compound annual growth rate (CAGR) of 22.1%. The number of operational National Waterways has increased from five in 2014 to 26 in 2024. Furthermore, policy measures such as the cargo promotion scheme providing 35% incentive to promote the utilisation of Inland Waterways Transport(IWT) sector by cargo owners and for establishing scheduled service for cargo movement on NW-1 and NW-2 and NW-16 via Indo Bangladesh Protocol has been approved by the Government. This scheme aims to divert 800 million tonne Km cargo on IWT mode, which is nearly 17% of the current cargo of 4700 million tonne Km on NWs.
The Government has prioritised indigenous shipbuilding and repair to reduce dependence on foreign manufacturers and boost domestic manufacturing capabilities. Dedicated shipbuilding clusters have been established in states such as Gujarat, Maharashtra, Odisha, Kerala, and Andhra Pradesh. These clusters aim to create a comprehensive ecosystem, promoting employment and self-reliance in line with the ‘Make in India’ initiative. Financial incentives and subsidies have further supported the sector, ensuring robust growth and competitiveness. India's maritime trade has expanded significantly under the Modi administration, with policies encouraging the participation of Indian-flagged vessels in international and coastal trade. The Coastal Shipping Bill, 2024, aims to streamline regulations, reduce bureaucratic hurdles, and foster a competitive environment for Indian operators. The tonnage of Indian-flagged vessels has seen consistent growth, with 1,530 vessels accounting for 13.7 million Gross Tonnage (GT) as of 2024, indicating a shift toward self-reliance in maritime operations.
Recognizing the importance of sustainable growth, the Modi Government has integrated environmental safeguards into the shipping sector. Initiatives promoting the use of green fuels, energy-efficient technologies, and adherence to international maritime pollution protocols, have positioned India as a responsible maritime nation. Green ports and eco-friendly shipping practices are now a priority, ensuring the sector’s growth aligns with global environmental standards. The Government's focus on the maritime sector has created significant employment opportunities, both directly and indirectly. The development of ports, coastal infrastructure, and ancillary industries has generated millions of jobs. Skill development initiatives, including specialised training programs for seafarers, have been introduced to enhance the employability of India's workforce in the global shipping industry. India’s contribution as a leading supplier of seafarers worldwide further underscores this achievement.
Under Prime Minister Modi ji’s leadership, India has emerged as a prominent player in global maritime affairs. By aligning domestic policies with international standards and actively participating in global forums, India has strengthened its position as a maritime power. Collaborative efforts with countries for maritime security and trade, along with India’s leadership in ship recycling (ranking third globally), demonstrate the sector's improved global stature.
Image 1: Comparison Of Budgetary Allocation for Ministry of Ports, Shipping and Waterways (in ₹ crore) under the UPA and NDA Governments