CABOTAGE

About:

• Cabotage means reserving coastal trade for national flag vessels; in other words, it refers to the practice of imposing restrictions for movement of domestic cargo by foreign flag vessels.
  
  
• Arguments for Cabotage: Cabotage restrictions are applicable in most countries to protect the domestic shipping industry from foreign competition as well as for the purpose of national security. China and USA are known to impose absolute cabotage restrictions.
  
  
• Arguments against Cabotage: However, the contrary view is that if coastal ships are less in number, cabotage restrictions do not do any good for the nation.
  • For instance, the growth of coastal fleet in India is not viewed as impressive.
    
    
  • When there are not enough domestic coastal vessels, imposing cabotage, discourages coastal transport due to the procedural lags.
    
    
  
  
  

Indian scenario:

• Cabotage is applied in the coastal trade or the internal trade from one port to another in India, which is generally carried out by ships of lower draft/depth. There is no absolute cabotage restriction in India.
  
  
• Legal backing: The policy of cabotage restriction for movement of domestic cargo by foreign flag vessels along the coast of India is governed as per Section 407 of the Merchant Shipping Act, 1958, as amended from time to time.