Modernising The Coastal Shipping Framework: Coastal Shipping Bill, 2025

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Policy Update
Pranathi Poreddy

Introduction

The Coastal Shipping Bill is a legislation passed on August 7, 2025, to strengthen and modernise the Indian Maritime Sector and bolster the Coastal Economy. This progressive piece of legislation replaces part XIV of the Merchant Shipping Act, which regulates ships excluding sailing vessels, which limited its scope. The Coastal Shipping Act, in addition, regulates all types of vessels, ships, boats, sailing vessels, offshore drilling units, etc., in the Coastal waters of India, i.e, territorial waters of India, extending up to 22 kms.

The act was legislated in order to achieve the objectives of promoting domestic participation and boosting coastal shipping, aligning the Indian laws with International maritime laws. Sabarananda Sonowala, Minister of Ports, Shipping and Waterways, remarked that the Act aims to “boost coastal cargo up to 230 million tonnes by 2030”, reaching up to the competition from their global counterparts, while also adhering to the Net Zero by 2079 objective, upholding the Paris Agreement.

The legislation aims to capitalise on the widespread 11,098 km of coastline to further the strategies of  Aatmanirbhar Bharat and  Viksit Bharat.  The Act was passed along with the Merchant Shipping Bill and the Carriage of Goods by Sea Bill, to lay the foundation of the future of the Indian Maritime Sector and to effectively promote trade. The Act envisions a shift into a streamlined and linear licensing system and structural regulational foreign vessels, which protects domestic interests and increases the efficiency of supply-chain management.

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Growth of the Indian Shipping Industry. Source: Indian Infrastructure

Provisions of the Act

  • Dispute Resolution: The provisions in the legislation provide for the resolution of disputes as per the Maritime Labour Convention (MLC), 2006. The act provides for fast, fair and accessible grievance redressal and mandates an ‘on-board complaint mechanism’.
  • Enforcement: Every Vessel engaging in trade must be regulated and enforced by the Director General of Shipping, as per the’ Inland Vessels Act’. The DG also possess the power to revoke, suspend or modify any license. All the vessels must also report to the DG their voyage routes, port stops, goods and passengers carried and entrance into any offshore area.
  • Penalty System: Engaging in trade practices contrary to the Indian legal provisions and illegal trading is punished with 6 months of jail or a fine of fifteen lakh rupees or four times the illicit gains, whichever is higher.
  • Data Transparency: The Central Government is mandated to publish a ‘National Coastal Inland Shipping Strategy Plan’ within a period of two years for streamlining of data. This plan involves a stakeholder committee comprising representatives from states, major ports, the maritime board, the National Security Council Secretariat and other experts for its formulation.
    This plan is set to identify the practices for improvement of coastal shipping through the inclusion of inland waterways, the new routes for operational efficiency and the registration and promotion of the same. A National database is also to be constituted, containing information about applications received, licenses granted, routes and voyages of the vessels, expired and revoked licenses, etc.
  • Enhancing Coastal Security: Through the explicit provisions for monitoring the vessels and licensing, the act empowers the authorities and vests the power in the Director General of Shipping to issue instructions to all vessels regarding coastal security.

Implications of the policy on the Indian Maritime Sector

The legislation was passed with an objective to streamline the regulations and to promote trading by Indian vessels while integrating inland waterways to the main waterway for the ease of doing business. The act extensively supports Indian trading by regulating the mechanisms of provision of licenses and through promotion of water routes as a viable option, delegating the necessary powers to the Indian Coast Guard, Marine Police and Indian Navy for the protection of the cargo.

The major positive outlook from this legislation is the provisions for the advancement of the port infrastructure. The Union government, in their endeavour to increase the water traffic by 2030, aims to enhance and modernise the infrastructure of the maritime sector to further its logistical and digital goals. Developing comprehensive databases, advancing green port initiatives, strengthening port infrastructure, and implementing digital tracking systems are additional strategies employed to achieve this.

The legislation also aims to put India at the global forefront by advocating for sustainability in its shipping operations. This empowers the nation with the soft power to counter its competitors, China and the USA. The’Green Port Initiatives’ under this legislation mandate for adoption of renewable energy by ports, as per the Paris Convention. The goal of 0 discharge to be undertaken by the ports is also a notable exercise. The ships are also mandated to adopt cleaner shipping practices by replacing the fuel with low-sulphur fuels and electric power. This provision complies with the IMO MARPOL emission standards, which require a reduction in the usage of Sulphur Oxide and Nitrogen Oxide.

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IMO MARPOL ANNEXURE ; Source: Imo.

Limitations of the Act

The Coastal Shipping Act is a progressive and comprehensive piece of legislation which intends to drastically improve the Indian Maritime Industry. However, this legislation also has its own limitations. The act, in its provisions, provides mandates for the protection and regulation of all stakeholders, except for Indian seamen in foreign vessels. The Indian seafarers in foreign ships increased from 1,16,000 in 2015-16 to 2,85,000 in 2024. There are no explicit provisions for the welfare and safety of this section of the workforce. 

Another notable challenge for the operationalisation of this bill lies in the huge enforcement difficulties. The licensing provisions of licensing of all the vessels and seafarers and documentation of the whole journey are a strenuous process, considering the huge coastline of India. This could prove difficult for the authorities to extensively monitor the same with the already overworked workforce. 

Way forward

Effective implementation of this act will regulate the maritime sector in India. Increasing operational capacities, accelerating the unification of data in the database, improvement in digital and physical infrastructure are some essential and priority areas. While the documentation and licensing may prove to be a rigorous process for small-scale ships, with appropriate incentives like microfinancing and tax incentives, the problem. The industry could be impacted positively with FDI from global investments to bolster the infrastructure. The authorities must maintain strict compliance with International frameworks for the accomplishment of their objective of obtaining a standing in the global competitive stage.

Conclusion

 The act reinforces the Atmanirbhar India, which is a self-sufficient and efficient maritime sector. A progressive legislation which regulates sea trading is beneficial in the current stage of production and sets off to unleash the full potential of the maritime sector. 

References

About the Contributor:

Pranathi Poreddy, is a second-year law student at Damodaram Sanjivayya National Law University working as a research intern at IMPRI.

Acknowledgement: The author extends his sincere gratitude to the IMPRI team and Ms. Aasthaba Jadeja for her invaluable guidance throughout the process.

Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.

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