DP World expects relaxation in Indian cabotage policy

The company expects that the Indian government will soon take a decision on the relaxation of the cabotage policy, given its huge investment in the Vallarpadam port project

A relaxation in the cabotage policy to improve trade volumes at the planned Vallarpadam port and other major ports in India is being considered. Company officials from DP World are hopeful about such relaxation soon.

Dubai-based DP World, one of the largest marine terminal operators in the world with 49 terminals, is the private operator set to run the terminal at Vallarpadam in Cochin port in India. The port is being developed as a trans-shipment hub on a public-private partnership model. The project involves a total investment of Rs2,200 crore, with an investment of Rs1,000 crore by the Indian government and Rs1,200 crore by DP World.

The trans-shipment hub is being built in phases and the first phase is expected to be commissioned by June 2010. On being questioned whether contracts with various clients for using this port have been finalised, Anil Singh, senior vice president and managing director for the subcontinent at DP World Pvt Ltd, said, “We are just waiting for the Indian government to relax the cabotage issues. We will sign the contracts after that (the relaxation of the cabotage policy).”

“Their proposal is under consideration. We will have to verify their projections. We need to see what lies in favour of the overall economy. When the issue is under consideration, it is a little difficult to opine. They (DP World) are talking of business that will be added to the existent business available in Indian shipping. Their projection is that it is a win-win opportunity, as it will bring (in) added business. Now, we need to discuss it with the remaining stakeholders. The only problem will arise when people object on the differences in the share of added business that each one will get. I hope we will be able to convince them (stakeholders) that it is an overall win-win situation,” said Dr Satish Balram Agnihotri, joint director general, department of shipping.

For the port to be commissioned in 2010, such relaxations in the policy will have to be worked on soon. “We are very hopeful (that the relaxation will happen before the commissioning date), because it involves a huge investment from the government,” said Mr Singh. “We should be able to decide on it before June 2010,” added Dr Agnihotri.

DP World officials claim that the new transhipment hub will help attract around a million tonnes of cargo towards India. “This will help bring back India’s cargo from ports like Colombo and Jebel Ali,” said Mr Singh in a presentation made at a Confederation of Indian Industry conference on costal shipping.

Cabotage is the transport of goods between two points in the same country. At present, the cabotage policy in India allows first preference to Indian flagships over cargo. Foreign ships are allowed to carry this cargo only when no suitable Indian flag vessel is available for the same.

Relaxation in the cabotage policy is expected to bring more trade to Vallarpadam and other major ports in India. However, PTI news reports on the cabotage policy suggested that barring of foreign ships on the Indian coast for security reasons is being considered.
 

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