News / India extends relaxation of cabotage rules as transhipment volumes grow

Photo: @JNPA

India has heeded calls from foreign-flagged container lines and industry stakeholders to keep cabotage rule relaxations in operation to support the rerouting of containers stranded by the Middle East crisis.

In late January, New Delhi said the cabotage waiver, in force since 2018, would be revoked from late April, as the liberalised policy hadn’t yielded the desired results for cargo interests.

But the revocation has been put on the backburner for six months until October.

Indian authorities said the extension had become necessary to facilitate container relays prompted by the widespread suspension of ports across the Persian Gulf.

“The Ministry of Ports, Shipping and Waterways, after a detailed review and feedback from stakeholders, has considered a limited and time-bound extension of the implementation timeline in view of the exceptional and evolving global circumstances, to ensure operational continuity and stability in container shipping operations,” the order said.

JNPA (Nhava Sheva) and Mundra ports have seen significant additional transhipment volumes since the Middle East disruption began. For example, JNPA saw some 121,000 teu of transhipment volumes in March, compared with just 35,000 teu in February, according to provisional data.

The reprieve has been welcomed by industry groups, especially the Container Shipping Lines’ Association, which said it was “much needed under the current circumstances wherein transhipment at Indian ports has further increased”.

From a broader perspective, seeking a review of the intended move to reintroduce cabotage restrictions, foreign lines claimed the cabotage relaxation had boosted transhipment activity across the major Indian ports, reducing the need for local exporters/importers to use other Asian hubs for mainline connections.

But there are divergent views.  Some industry voices believe the government wants to weaponise these regulatory levers to push foreign lines into reflagging vessels in India – which several major carriers have already done, Hapag-Lloyd the latest, via a letter of intent signed with Indian authorities last month.

That included a commitment to reflag up to four containerships in India, adding: “At this stage, no specific timeline, vessel profile or capacity range has been defined. Any reflagging would remain subject to further discussions, internal assessments, commercial considerations and applicable legal and regulatory requirements.”

CSLA also reaffirmed that evolving interest within the industry.