Tag: Coastal Shipping Act

Introduction to the Coastal Shipping Act 2025

The Coastal Shipping Act, 2025, enacted on August 9, 2025, represents a landmark transformation in India’s maritime legal framework. This revolutionary legislation aims to consolidate and modernize laws governing coastal shipping, boost domestic participation in coasting trade, and ensure India’s maritime security through a citizen-owned coastal fleet. ¹

This act replaces the outdated Part XIV of the Merchant Shipping Act, 1958, aligning India’s maritime regulations with global standards while unlocking the immense potential of India’s 11,098 km coastline – a strategic step toward achieving the twin national visions of “Viksit Bharat” (Developed India) and “Aatmanirbhar Bharat” (Self-Reliant India).

Key Statistics at a Glance

• Target for coastal cargo: 230 million metric tonnes by 2030
• Growth in coastal shipping (2015-2024): 133% increase (from 74 to 172.5 million tonnes)²
• India’s coastline: 11,098 kilometers
• Current coastal shipping freight share: 5% (compared to 40% in EU)
• Potential reduction in logistics costs: 3-4% of GDP³

Key Highlights of the Coastal Shipping Act 2025

The Coastal Shipping Act introduces several ground-breaking reforms that position India for maritime excellence:

• Simplified Licensing System: Removes license requirements for Indian vessels while maintaining strategic control over foreign vessels in Indian waters ⁴
• Strategic Planning Framework: Mandates a National Coastal and Inland Shipping Strategic Plan with biennial updates
• Data-Driven Governance: Establishes a comprehensive National Database for evidence-based policymaking
• Expanded Coasting Trade Definition: Includes services like exploration and research beyond just cargo and passenger transport⁵
• Multimodal Integration: Promotes synergy between coastal shipping and inland waterways
• Inclusive Stakeholder Participation: Creates a multi-stakeholder committee representing central and state interests
• Environmental Sustainability Focus: Encourages shift to more energy-efficient transportation modes

Historical Context and Need for Maritime Reform

India’s maritime sector has operated under increasingly obsolete regulations that failed to address contemporary challenges and opportunities. As the 16th largest maritime nation globally, handling 95% of trade by volume and 70% by value through its network of ports, India needed a modernized legal framework to improve its global competitiveness. ⁶

Critical Factors Driving the Need for Reform

Factor	Challenge	Solution in Coastal Shipping Act 2025
Economic Inefficiency	High logistics costs (13-14% of GDP vs. global average of 8-10%)	Promotes cost-effective coastal shipping to reduce overall logistics expenses
Environmental Impact	Transport sector contributes 10-11% of India’s GHG emissions (roads: 90%, rail: 3%, waterways: <1%)	Encourages modal shift to energy-efficient water transport
Infrastructure Underutilization	Indian ports operate below capacity potential	Strategic planning to optimize port usage and development
Foreign Dependence	Reliance on foreign vessels causes foreign exchange outflow	Promotes Indian-owned vessels for coastal trade
Regulatory Complexity	Outdated, fragmented regulatory framework	Streamlined, modern legal structure aligned with global standards
Regional Development Gaps	Uneven economic development in coastal regions	Catalyst for local economic growth and job creation

India’s position in the World Bank’s Logistics Performance Index (38th in 2023) highlighted significant room for improvement, reinforcing the urgent need for the transformative Coastal Shipping Act.

Comprehensive Provisions of the Coastal Shipping Act

Scope and Applicability

The Coastal Shipping Act, 2025 has a comprehensive scope that covers:

• Vessel Types: All water craft used or capable of being used in the marine environment, whether self-propelled or not, including:
  • Ships and boats
  • Sailing vessels
  • Fishing vessels
  • Submersibles and semi-submersibles
  • Mobile offshore drilling units
  • Other marine vessels ⁷
• Geographical Coverage:
  • Territorial waters (extending up to 12 nautical miles from coast)
  • Adjoining maritime zones (extending up to 200 nautical miles)
• Trade Activities:
  • Vessels engaged in coasting trade
  • Chartered vessels as specified in Chapter IV
  • Services including exploration, research, and commercial activities

Licensing Framework for Coasting Trade

Chapter II of the Act revolutionizes the licensing system for coastal shipping in India:

License Exemptions and Requirements

• Exempt from Licensing: Vessels wholly owned by Indian persons – a significant step toward reducing compliance burdens and enhancing ease of doing business
• License Required: All non-Indian vessels engaged in coasting trade

Director-General’s Licensing Considerations

When reviewing license applications, the Director-General of Shipping evaluates:

• Applicant’s historical compliance
• Previous violations of the Act
• Crew nationality
• Vessel build requirements
• Route availability analysis
• Safety and national security concerns
• Onboard equipment standards
• Transport cost efficiency
• Alignment with Strategic Plan
• Certification and insurance validity

Special Provisions for Inland Vessels

The Director-General can authorize vessels registered under the Inland Vessels Act, 2021 to engage in coastal trade through written orders, facilitating multimodal integration.

License Management and Reporting

• Validity and Classification: The Director-General specifies license validity periods and categories
• Regulatory Actions: Licenses can be suspended, revoked, or modified for violations or non-compliance
• Mandatory Reporting: Vessels must report:
  • Ports of call during voyages
  • Cargo and passenger details with drop-off locations
  • Offshore operating areas

National Coastal and Inland Shipping Strategic Plan

Chapter III establishes a visionary planning framework through the National Coastal and Inland Shipping Strategic Plan:

Development Timeline and Update Cycle

• Initial development: Within 2 years of Act commencement
• Update frequency: Every 2 years via government notification

Strategic Plan Components

The comprehensive plan addresses:

1. Route Assessment: Evaluation of existing coastal shipping routes including inland waterway connections
2. Operational Improvements: Identification of enhancements needed for cost-efficient maritime transport
3. Traffic Forecasting: Long-term projections for coastal and inland waterway traffic
4. Best Practices: Performance optimization strategies and intermodal synergies
5. Route Development: Identification of new routes and integration opportunities
6. Fleet Expansion: Measures to promote building, registration, and participation of Indian vessels
7. Inland-Coastal Integration: Guidelines for inland vessels in coastal operations

Multi-Stakeholder Planning Committee

The Act establishes a diverse committee to prepare the Strategic Plan, including:

• Central Government Representatives:
  • Director-General of Shipping (Chairperson)
  • Chairman of Inland Waterways Authority of India
  • National Security Council Secretariat representative
• Port Authorities: Representatives from each Major Port Authority Board
• State Representatives: Members from State Maritime Boards
• Industry Stakeholders: Ship owners and seafarers representatives
• Subject Matter Experts: Maritime specialists appointed by the government

National Database of Coastal Shipping

The Act establishes a centralized information system to enhance transparency and facilitate evidence-based decision-making:

Database Structure and Access

• Maintained by: Director-General of Shipping
• Format: Electronic web portal
• Update frequency: Monthly
• Accessibility: Public access

Database Contents

The comprehensive repository includes:

• License applications and their status
• Approved licenses with terms and conditions
• Active coastal trade routes and services
• Applicant requirements documentation
• License expiration and revocation records
• Vessel-reported information
• Other relevant maritime data

This database enhances transparency, improves infrastructure planning, and builds investor confidence in India’s maritime sector. ⁸

Regulations for Chartered Vessels

Chapter IV extends the Act’s regulatory framework beyond coastal operations to international shipping:

Eligibility for Vessel Chartering

The Act expands chartering opportunities to:

• Indian citizens
• Non-resident Indians (NRIs)
• Overseas citizens of India (OCIs)
• Companies and cooperative societies
• Limited liability partnerships
• Other entities specified by the government

Operational Routes Covered

• Indian ports to international ports
• International ports to Indian ports
• Between international ports (when chartered by eligible Indian entities)

Licensing Exemptions

OCIs hiring vessels for operation exclusively outside India are exempt from licensing requirements, facilitating global operations by the Indian diaspora.

Offences, Penalties, and Enforcement

The Act establishes a robust enforcement framework to ensure compliance:

Punishable Offenses

• Unauthorized participation in coasting trade
• Operating with expired licenses
• Providing false or misleading information
• Violating license conditions
• Non-compliance with official directives

Enforcement Authorities

The following officials may detain vessels under the principal officer’s instructions:

• Naval, Coast Guard, or Police commissioned officers
• Port officers
• Pilots and harbor masters
• Port conservators
• Customs commissioners

Transition Provisions

While repealing Part XIV of the Merchant Shipping Act, 1958, the Act retains Section 411A regarding protection of Indian shipping interests from foreign intervention. A savings clause ensures smooth transition by maintaining validity of existing rules, regulations, and licenses until expiration or replacement.

Impact Assessment of the Coastal Shipping Act

Environmental Benefits and Sustainability

The Coastal Shipping Act, 2025 delivers significant environmental advantages by promoting modal shift to more sustainable transportation:

Carbon Footprint Reduction

• Current Emissions Profile: Transport contributes 10-11% of India’s greenhouse gas emissions
  • Road transport: 90%
  • Railways: 3%
  • Waterways: Less than 1%
• Energy Efficiency Comparison: Waterways are significantly more energy-efficient than road and rail transport
  • 1 liter of fuel can move:
    • 24 ton-km by road
    • 85 ton-km by rail
    • 105 ton-km by inland water transport ⁹

Alignment with Climate Goals

The Act supports India’s alignment with:

• IMO’s mandate for net-zero maritime emissions by 2050
• India’s Nationally Determined Contributions under the Paris Agreement
• Green shipping initiatives like the India–Singapore Green & Digital Shipping Corridor
• Development of green hydrogen hubs at ports like Paradip, Kandla, and Tuticorin

Urban Environmental Benefits

• Reduced road congestion in port cities and major logistics corridors
• Lower particulate matter emissions in urban areas
• Decreased noise pollution from freight transport
• Minimized road infrastructure damage from heavy vehicles

Economic Impact and Growth Projections

The Coastal Shipping Act, 2025 promises transformative economic benefits across multiple dimensions:

Cargo Volume and Market Growth

• Target: 230 million tonnes of coastal cargo by 2030
• Historical Growth: 133% increase between 2015-2024 (74 million tonnes to 172.5 million tonnes)
• Current Modal Split: Road (66%), Rail (31%), Coastal (5%)
• EU Benchmark: 40% of freight moved by coastal shipping

Logistics Cost Reduction

• Current Logistics Cost: 13-14% of GDP
• Global Average: 8-10% of GDP
• Potential Savings: 3-4% of GDP through modal optimization
• Per-kilometer Cost Comparison:
  • Road: ₹2.50 per ton-km
  • Rail: ₹1.36 per ton-km
  • Waterways: ₹1.06 per ton-km

Employment Generation

The expansion of coastal shipping will create jobs across multiple sectors:

• Direct Employment:
  • Vessel operations and management
  • Port operations and handling
  • Maritime administration and support services
• Indirect Employment:
  • Shipbuilding and repair
  • Marine equipment manufacturing
  • Maritime technology and digital services
  • Logistics and supply chain management

Economic Security Benefits

• Foreign Exchange Conservation: Reduced dependence on foreign vessels prevents outflow of valuable foreign exchange
• Supply Chain Resilience: Domestic shipping fleet enhances security against international disruptions
• Regional Development: Economic growth in coastal areas through maritime-related industries and services

Transformation of Indian Ports and Infrastructure

The Coastal Shipping Act catalyzes significant improvements in India’s maritime infrastructure:

Port Capacity and Efficiency Enhancements

• Capacity Growth: 87% increase in major ports’ cargo-handling capacity (2014-2024), reaching 1,629.86 million tonnes
• Efficiency Improvements: Turnaround time reduction from 93.59 hours (2013-14) to 48.06 hours (2023-24)
• Cargo Handled: 819.22 million tonnes in FY24 across major ports

Multimodal Integration Benefits

• Seamless Cargo Movement: Integration of coastal shipping with inland waterways creates a comprehensive transportation network
• Last-Mile Connectivity: Reduced costs through optimized intermodal transfers
• Improved Port-Hinterland Connections: Enhanced rail and road links to inland destinations

Investment and Development Opportunities

• Private Sector Participation: 100% FDI under automatic route for port and harbor projects
• Public-Private Partnerships: Core strategy for modernizing facilities, with government’s $82 billion investment plan through 2035
• Sagarmala Initiative: 116 projects identified to unlock more than 100 million metric tonnes per annum capacity across 12 major ports

Reduction in Foreign Port Dependence

• Current Transshipment Reliance: 75% of India’s transshipment cargo handled at foreign ports
• Annual Revenue Loss: USD 200-220 million
• Strategic Projects: Development of domestic transshipment capabilities through projects like the Vizhinjam International Deepwater Seaport

Comparative Analysis: Old vs. New Maritime Regulations

The Coastal Shipping Act, 2025 represents a paradigm shift from the previous regulatory framework under the Merchant Shipping Act, 1958:

Parameter	Merchant Shipping Act, 1958 (Part XIV)	Coastal Shipping Act, 2025	Key Advantage
Legislative Approach	Vessel-centric provisions embedded within broader shipping law	Dedicated, standalone legislation focused specifically on coastal shipping	Greater policy focus and specialized governance
Vessel Coverage	Limited to ships other than sailing vessels engaged in coasting trade	All vessel types regardless of propulsion method, plus chartered vessels	Comprehensive regulation of diverse maritime assets
Coasting Trade Definition	Limited to goods and passenger transport between Indian ports	Expanded to include services such as exploration, research, and other commercial activities	Accommodates modern maritime business models
Licensing Requirements	All vessels in coasting trade required licenses	Indian vessels exempted; only foreign vessels require licenses	Reduced compliance burden for domestic operators
Chartering Eligibility	Limited provisions for chartered vessels	Expanded to NRIs, OCIs, LLPs; dedicated chapter on licensing	Greater opportunities for Indian diaspora investment
Strategic Planning	No formal planning provisions	Mandated Strategic Plan with biennial updates	Long-term vision and adaptability
Data Management	No centralized information system	National Database with public access	Transparency and evidence-based decision-making
Intermodal Integration	Limited coordination with other transport modes	Explicit promotion of coastal-inland waterway integration	Seamless multimodal transportation network
Stakeholder Involvement	Minimal provisions for stakeholder participation	Multi-stakeholder committee with state and industry representation	Inclusive governance and diverse expertise

This comprehensive modernization addresses the limitations of the previous framework while creating a forward-looking foundation for sustainable growth in India’s maritime sector.

Implementation Challenges and Strategic Solutions

Despite its transformative potential, the Coastal Shipping Act, 2025 faces several implementation challenges that require strategic solutions:

Infrastructure and Connectivity Gaps

Challenge:

• Inadequate port infrastructure, especially at non-major ports
• Insufficient drafts for larger vessels at many ports
• Poor last-mile connectivity between ports and inland destinations
• Limited intermodal transfer facilities

Strategic Solutions:

• Accelerated investment in port modernization through public-private partnerships
• Development of dedicated freight corridors connecting ports to industrial centers
• Standardization of intermodal equipment and procedures
• Digital integration of multimodal transport systems ¹⁰

Human Resource Development

Challenge:

• Significant skills gap, especially in high-tech maritime operations
• Shortage of professionals familiar with advanced technologies
• Gender imbalance (less than 2% of Indian seafarers are female)
• Limited specialized maritime education facilities

Strategic Solutions:

• Establishment of specialized maritime technology training centers
• Industry-academia partnerships for curriculum development
• Gender diversity initiatives with targeted recruitment programs
• International exchange programs and certification standardization

Governance and Coordination

Challenge:

• Potential tensions between central and state authorities
• Complex clearance processes causing operational delays
• Regulatory overlap between different maritime agencies
• Resistance from stakeholders benefiting from status quo

Strategic Solutions:

• Implementation of cooperative federalism principles through regular consultations
• Digitalization of customs and regulatory procedures
• Single-window clearance systems for maritime operations
• Stakeholder education and change management programs

Financial and Economic Barriers

Challenge:

• High initial investment requirements for fleet expansion
• Limited availability of specialized maritime financing
• Competition from established international shipping lines
• Uncertainty during transition period

Strategic Solutions:

• Dedicated maritime development funds and credit enhancement mechanisms
• Tax incentives for coastal shipping investments
• Risk-sharing mechanisms for early adopters
• Clear transition guidelines with adequate preparation time

Addressing these challenges requires coordinated efforts from government agencies, industry stakeholders, and educational institutions, supported by adequate funding, technology adoption, and skill development initiatives.

Conclusion: The Future of Indian Maritime Sector

The Coastal Shipping Act, 2025 marks a watershed moment in India’s maritime history, laying the foundation for a new era of growth, efficiency, and sustainability in the coastal shipping sector. By replacing outdated regulations with a forward-looking framework, the Act addresses longstanding challenges while creating unprecedented opportunities for innovation and development.

The Act’s comprehensive approach—encompassing licensing reforms, strategic planning, data management, and multimodal integration—provides a robust platform for achieving ambitious goals such as increasing coastal cargo to 230 million tonnes by 2030 and reducing logistics costs to globally competitive levels.

As part of India’s broader maritime reform package that includes the Merchant Shipping Act, 2025, and the Carriage of Goods by Sea Bill, 2025, this legislation demonstrates a clear commitment to transforming India into a global maritime powerhouse. With this new legal foundation firmly established, the focus now shifts to implementation, where the National Coastal and Inland Shipping Strategic Plan will serve as the roadmap for translating vision into reality.

The success of the Coastal Shipping Act will ultimately be measured by its contribution to key national objectives: enhancing economic competitiveness, creating sustainable employment, improving environmental performance, strengthening supply chain security, and advancing the twin visions of “Viksit Bharat” (Developed India) and “Aatmanirbhar Bharat” (Self-Reliant India). With effective implementation and stakeholder collaboration, the Act has the potential to usher in a golden age for India’s maritime sector, with benefits that extend far beyond the coastline to touch the lives of all Indians.

Key Takeaways

• The Coastal Shipping Act 2025 revolutionizes India’s maritime legal framework by replacing outdated regulations with a modern, dedicated coastal shipping law
• It aims to increase coastal cargo to 230 million tonnes by 2030 through streamlined licensing, strategic planning, and data-driven governance
• Environmental benefits include reduced carbon emissions through modal shift from road (90% of transport emissions) to energy-efficient waterways
• Economic advantages include lower logistics costs, job creation, foreign exchange conservation, and regional development
• The Act creates a multi-stakeholder approach to maritime governance, balancing central coordination with state and industry participation
• Successful implementation requires addressing infrastructure gaps, human resource development, governance coordination, and financial barriers

References:

1. mondaq: Modernizing India’s Maritime Sector: The Coastal Shipping Act, 2025 ↩︎
2. indiatimes: A separate coastal shipping law could make India an attractive … ↩︎
3. drishtiias: Coastal Shipping Bill & Protection of Interest in Aircraft Objects Bill ↩︎
4. prsindia: The Coastal Shipping Bill, 2024 ↩︎
5. scconline: Coastal Shipping Act, 2025 issued to streamline Coasting Trade … ↩︎
6. drishtiias: (13 Aug, 2025) ↩︎
7. prsindia: THE COASTAL SHIPPING BILL, 2024 ______ ↩︎
8. drishtiias: Bills to Modernise India’s Maritime Laws ↩︎
9. drishtiias: India’s Maritime Sector in Transformation ↩︎
10. drishtiias: India’s Maritime Sector in Transformation ↩︎