India has exempted ro-ro, LNG, and project cargo vessels from cabotage regulations, opening up the coastal run to foreign vessels. The move follows intensive discussions with auto industry representatives and vehicle carriers.
The relaxation was announced by the shipping ministry on 14 September. It will be effective for five years and will enable vessel operators to bring in foreign-flagged ships to ply coastal routes.
“Such special vessels are in short supply in the country but, since they cater to a specific class of cargo, their availability will make it possible to shift cargo movement for these commodities from road and rail to coastal shipping,” the ministry said in a press statement.
The move aims, among other things, to relieve congestion on road and rail and to promote coastal shipping, which is seen as a environmentally cleaner alternative.
Indian tonnage falls well short of demand for carriage of vehicles, which is rising on the back of emergence of auto hubs near the southern ports of Chennai and Ennore, in Gujarat on the west coast, and in the northern industrial belt.
“Large numbers of cars are transported from north to south and vice-versa. It is possible to shift a major part of this transport to coastal shipping,” the shipping ministry observed.
Industry has been quick to welcome the move. “This will certainly provide a fillip to coastal shipping,” Capt Sandeep Chawla, executive director of NYK Auto Logistics (India), told IHS Maritime. Part of Japan’s NYK Group, the auto logistics arm was a party to discussions with the government on more efficient transport of vehicles within the country.
Foreign car carriers such as NYK can now pick up additional cargo from Indian ports, Chawla pointed out. He was quick to add, however, that the crucial issue was the additional cost incurred in transporting cars from ports to inland destinations.
The government appears to be willing to bear at least part of the additional cost. Industry sources said that in a bid to encourage coastal shipping the government would provide a subsidy of INR3,000 (USD45) per car shipped along the coast.
Official confirmation on the subsidy, however, is awaited.