The Indian Government plans to lift all cabotage laws to allow foreign-owned and flagged vessels to operate along its coast without requiring a licence from the Directorate General of Shipping.

The change could significantly impact Indian shipowners, who rely on the restrictions to safeguard their businesses.

The Indian government committed to promoting coastal shipping "though PPP (Public-private- Partnerships) mode with viability gap funding" in its 2023 budget announced earlier this year.

Coastal shipping only holds a 7% market share of goods transported compared with 62% moved by road and 31% by rail. By removing the cabotage laws, the government aims to promote coastal shipping as a greener and lower-cost mode of transport.

In addition, it believes lifting the restrictions would allow more goods to be moved between ports, freeing up space in container yards and encouraging overall trade.

India's cabotage laws have been in place since the 1950's. In 2018, the government revised its position to allow for the transhipment of laden export and import containers, empty containers meant for re-positioning, agriculture, horticulture, fisheries, fertiliser and animal husbandry commodities on domestic routes without a license from the Directorate General of Shipping.

Indian media outlet ET Infra reports that a document from the Ministry of Ports, Shipping and Waterways claims coastal shipping and transhipment volumes have increased after these changes.

To further cement its commitment, the Ministry said the focus should be on enhancing ports and jetties, improving port connectivity, determining suitable vessel types and capacities and mitigating the financial burdens of multimodal transportation.

While it is not yet known when the changes will be effective, or their impact, some say push-back from the Indian National Shipowners Association can be expected.

India is not the only country preventing foreign ships from operating along its coast. According to the American Maritime Partnership, two-thirds of the world's nations have some degree of cabotage law. In the U.S., cabotage law, more familiarly known as the Jones Act, allows only U.S.-flagged, U.S.-crewed, U.S.-built and U.S.-owned vessels to transport goods and passengers between its ports.