Maritime Makeover: How Two New Shipping Legislations Will Redefine India’s Sea Power

The ongoing Winter Session of Parliament is set to steer India’s maritime ambitions with two game-changing legislations—the Merchant Shipping Bill, 2024, and the Coastal Shipping Bill, 2024.

Part of long-overdue reforms, these bills aim to drive holistic growth in coastal shipping while slashing compliance burdens for Indian-flagged vessels, charting a course for a stronger, more competitive maritime sector.

Merchant Shipping Bill

The Merchant Shipping Bill seeks to ensure compliance with India’s obligation under maritime treaties to which New Delhi is a party.

Replacing the Merchant Shipping Act of 1958, the Bill draws inspiration from maritime powerhouses like the United States (US), Japan, the United Kingdom (UK), Singapore, and Australia, aiming to position India as a robust player in the global maritime industry.

One of the Bill’s key provisions is simplifying business operations—no more general trading licenses for Indian vessels and an expansion of ownership eligibility.

Earlier, the 1958 Act required a ship flagged in India to be 100 per cent owned by Indian citizens or a company or body established under a central or state act with its primary place of business being India; and all of them had to be registered.

The proposed bill now expands ownership eligibility to include NRIs (Non-Resident Indians), OCIs (Overseas Citizens of India), and limited liability partnerships, a move expected to reduce the compliance burden and increase the quality and quantity of tonnage under the Indian flag.

For ship registration, the UN Convention on the Law of Seas (UNCLOS) requires that all vessels must sail under the flag of a particular state. Thus, shipowners must register their vessels with a Flag State and keep their vessels in a condition that satisfies the requirements of that particular flag state.

To further streamline the process, Indian-flagged vessels can now be registered without visiting Indian ports, slashing red tape and cutting down on operational costs.

The Bill also allows temporary registrations for ships intended for recycling in India and the registration of chartered vessels, thereby increasing opportunities for international trade.

However, the Bill’s scope goes beyond just business; it focuses on the seafarers who are the backbone of the global maritime industry. 

With provisions for better working conditions, robust mechanisms for repatriation of abandoned seafarers, and deployment of replacement crews on abandoned vessels, the Bill strengthens India’s commitment to its maritime workforce.

Given that India accounts for around nine per cent of the world’s seafarers, this move is crucial for addressing the global seafarer shortage and improving India’s role in the global supply chain.

Additionally, for the first time, the Bill introduces a statutory framework for maritime emergency response, empowering the centre to intervene in salvage operations and take decisive action against vessels deemed unsafe or hazardous to life at sea and the marine environment.

To mitigate environmental risks, the Bill mandates insurance and financial securities against accidents like oil spills. Additionally, it allows the centre to establish a dedicated fund for compensating damages from oil pollution, exceeding standard insurance coverage.

Coastal Shipping Bill

Coastal shipping refers to the movement of goods or persons by sea from any port or place in India to any other port or place in the country. It is the future of India’s transport network—cheaper, eco-friendly, and a powerful alternative to overloaded roads and railways.

Despite a 7,500 km coastline, waterways account for just 6.4 per cent of India’s transportation modal mix—far below the global average. The share of coastal shipping in Japan and the European Union (EU) is roughly five to six times higher, and the same is about seven times higher in China.

A low modal share of coastal shipping has significant implications for increased congestion and pollution levels on key land-based trade routes and high logistic costs.

India’s logistics cost is currently around 13 per cent, but with the expansion of coastal shipping, we can bring that figure down to below 10 per cent, aligning with global benchmarks seen in developed nations.

Therefore, to support growth in this sector, the government decided to carve out a separate legislation to govern coastal shipping, which is currently governed by Part XIV of the Merchant Shipping Act, 1958.

The Bill widens the definition of coastal shipping and coastal waters, bringing greater clarity and flexibility to the sector. By exempting trading licenses for Indian-flag vessels in coastal trade, the Bill will encourage more Indian ships to engage in coastal shipping, boosting local business and jobs.

Among other provisions, the Bill seeks to integrate coastal maritime transport with inland waterways, enabling efficient water-based transportation across India—from inland rivers to the sea.

Further, it also creates a statutory obligation for the creation of a National Coastal and Inland Shipping Strategic Plan and a comprehensive shipping database, ensuring a data-driven, strategic approach to the sector’s growth.

Thus, the new legislation will help increase the modal share of coastal shipping to 7.5 per cent by 2030 and ultimately to 12 per cent by 2047. Indian shipbuilding will also see a boost, as the Bill is designed to favour the use of India-built ships for domestic coastal shipping, contributing to the country's industrial and economic growth.