India’s Maritime Reforms and the Need for Course Correction

GS 2 – GOVERNANCE

Context

• On August 18, 2025, the Rajya Sabha passed the Indian Ports Bill, 2025, repealing the colonial-era Indian Ports Act, 1908.
• This is part of a larger maritime legislative package that also includes:
  • Coastal Shipping Act, 2025
  • Carriage of Goods by Sea Bill, 2025
  • Merchant Shipping Act, 2025
• The government claims these reforms will streamline maritime governance, modernise regulations, and align India with global shipping practices.

Positive Aspects of Reforms

• Modernisation – Updates outdated maritime laws to reflect global shipping, offshore activities, and conventions.
• Ease of Doing Business – Streamlines procedures, reduces overlapping regulations.
• Sustainable Ports – New Ports Act promotes planned and eco-friendly port growth.
• Global Alignment –
  • Broader vessel definitions (includes offshore drilling, new crafts).
  • Stronger regulation of training institutes.
  • Liability and insurance rules brought in line with global standards.

Key Concerns

1. Federalism & Centralisation
   • Ports Act 2025 centralises power:
     • Maritime State Development Council chaired by Union Minister.
     • States must follow central plans (Sagarmala, PM Gati Shakti).
     • Limits states’ financial autonomy in ports.
   • Seen as weakening cooperative federalism.
2. Dispute Resolution & Investor Confidence
   • Civil courts barred from hearing disputes (Clause 17).
   • Disputes handled by internal committees → no independent judicial review.
   • Could reduce investor trust and private participation.
3. Ownership Loopholes (Merchant Shipping Act)
   • Earlier law: only fully Indian-owned vessels.
   • New law: allows partial foreign/OCI ownership (thresholds left to govt).
   • Risks:
     • Excessive executive discretion.
     • Long-term foreign control via Bareboat Charter (BBCD).
     • India may become a “flag-of-convenience” state.
4. Burden on Small Operators (Coastal Shipping Act)
   • Cabotage: domestic trade reserved for Indian vessels.
   • But DG Shipping can permit foreign vessels on vague grounds (security/strategy).
   • Heavy reporting rules → hurts small players (esp. fishing sector).
   • Risk of marginalisation and central dominance.

Broader Implications

• Economic – Modernisation may boost investment but centralisation may deter businesses.
• Federal Balance – States lose significant role in shipping/port governance.
• Legal & Institutional – Weak dispute resolution and wide executive powers reduce transparency.
• Security & Sovereignty – Diluted ownership rules may weaken India’s control over its flagged ships.

Way Forward

• Wider parliamentary and state-level consultation in maritime policy.
• Ownership thresholds and licensing rules must be fixed in law (not left to executive discretion).
• Ensure independent judicial review in dispute resolution.
• Balance federal cooperation with national strategic goals.
• Protect small operators to prevent dominance by big players.