Home / Shipping / Aviation/ Cabotage relaxation a huge opportunity to woo Indian vessels to change flag to Sri Lanka

Cabotage relaxation a huge opportunity to woo Indian vessels to change flag to Sri Lanka

Comments / {{hitsCtrl.values.hits}} Views / Monday, 2 July 2018 00:00

In a rather surprising move, the Shipping Ministry in India sent out an unannounced notification that commencing late May the cabotage rule in India will be relaxed for a variety of cargo segments, opening up India’s coastal trade to foreign ships. 

This put the Indian Shipowners on the back foot as they have been in the recent years making heavy investments in expanding their fleet of vessels.

The previous rules in force were that it was only Indian flag vessels that could carry cargo along the Indian Coast for both Domestic and International cargoes. 

Statistics show that the fleet of ships under Indian flag has been expanding at a very rapid pace. In fact the cargo carrying capacity of the Indian fleet grew 22% between January 2015 and June 2018 from 7.87 million dead weight tons (dwt) to 9.58 million dead weight tons.

Whilst the Indian ship owners have been steadily increasing their fleet, they had to undergo severe hardships as ships flagged under the Indian flag were not supported and given any benefits by the government, and hence their cost of operations were very much higher than that of foreign flag vessels. Further the rules governing Indian flag vessels were very stringent. The only benefit was the Right of First Refusal (RoFR) for Indian flag vessels by which they had an advantage over foreign flag vessels which enabled them to secure the Indian cargo on the coast which kept them alive.

With the cabotage relaxation it is now a level playing field for Indian shipowners and foreign flag ships alike, and hence Indian shipowners have now commenced looking out for alternate flags of convenience. With these rapid developments, Sri Lanka is also been looked at very closely by them as an option and would be the ideal location for them to reflag to, considering its close proximity. Sri Lanka should also be proactive in attracting and inviting the Indian ship owners, which would hasten the process in reaching its dream of being the Maritime Hub in the region. 

Share This Article


1. All comments will be moderated by the Daily FT Web Editor.

2. Comments that are abusive, obscene, incendiary, defamatory or irrelevant will not be published.

3. We may remove hyperlinks within comments.

4. Kindly use a genuine email ID and provide your name.

5. Spamming the comments section under different user names may result in being blacklisted.


Today's Columnists

Unless addressed, wages issue will keep troubling Bangladesh’s garment industry

Saturday, 19 January 2019

The recent week-long mass protests by garment workers in Bangladesh came to an end after an upward revision of wages for six classes of workers. But even after the upward revision, the Bangladeshi garment worker gets less than what workers in compara

Is GDP the ideal metric of the future?

Friday, 18 January 2019

In an age of stark contradictions, we live in a world where the exclusive 1% enjoy access to an abundance of wealth and resources but also a world where a billion people scarcely have enough to eat and have limited access to health and education. Whi

Evaluation of economic performance: 4 years into Yahapalana Government

Friday, 18 January 2019

The Yahapalana Government completed four years on 8 January this year. The four-year journey was a rough ride with a clear rift between the President and the UNP; the ruling party. The Government continues to face severe criticism from both inside an

Elimination of bribery and corruption

Friday, 18 January 2019

Bribery and corruption can be regarded as a malicious cancer that has penetrated into almost every strata of Sri Lankan state. It can be considered a major factor affecting Sri Lanka’s poverty, backwardness and indebtedness. Abuse of power by thos

Columnists More