Parliament completed passage of the Coastal Shipping Bill, 2025 during the Monsoon Session, with the Rajya Sabha clearing the legislation that had been passed by the Lok Sabha on 3 April 2025. The new law carves out coastal shipping from the broader Merchant Shipping Act, 1958, establishing a dedicated legislative framework for India's coastal trade operations spanning its 11,098-kilometre coastline.
Background
Coastal shipping in India was previously regulated under Part XIV of the Merchant Shipping Act, 1958 — a framework originally designed for ocean-going vessels that was ill-suited to the specific requirements of domestic coastal trade. India's coastal fleet and cabotage regulations had long been governed by provisions that did not distinguish between the regulatory needs of international maritime operations and domestic coastal movements.
The separation of coastal shipping into standalone legislation had been recommended by multiple government committees over the past decade. The Bill forms part of a five-Bill maritime reform package advanced by the Ministry of Ports, Shipping and Waterways during 2025, replacing colonial and mid-twentieth century maritime statutes with purpose-built modern legislation.
Key Provisions
The Coastal Shipping Act, 2025 comprises six chapters and 42 clauses:
Simplified licensing regime: The Act introduces a streamlined licensing system for vessels engaged in coastal trade, replacing the complex permit structure under the 1958 Act. This is intended to reduce administrative burden on domestic shipping operators.
Regulation of foreign vessels: The Act lays down a clear framework for regulating foreign-flagged vessels engaged in coasting trade, codifying cabotage protections while allowing controlled participation by foreign vessels where domestic capacity is insufficient.
Indian ownership requirements: The legislation ensures that the coastal fleet is owned and operated by Indian citizens or Indian-controlled entities, reinforcing the policy objective of building indigenous shipping capacity.
Coastal infrastructure development: Provisions are included to facilitate development of coastal shipping infrastructure across India's nine coastal states and four union territories, recognising the economic potential of waterway-based cargo movement as a complement to road and rail networks.
Implications for Practitioners
The creation of a standalone coastal shipping statute fundamentally alters the regulatory landscape for domestic shipping operators and logistics companies. Practitioners advising shipping clients should note that the licensing requirements under the new Act will differ from the existing regime under Part XIV of the 1958 Act, and transitional provisions will need careful examination once the rules are notified.
For foreign shipping companies, the codification of cabotage rules provides greater clarity on the conditions under which their vessels may engage in Indian coastal trade. The framework appears to maintain India's protectionist stance while introducing a more transparent process for exceptions.
The commercial implications extend beyond shipping companies to port operators, logistics firms, and manufacturers in coastal states who stand to benefit from a more efficient regulatory environment for coastal cargo movement. Maritime lawyers should monitor the subordinate legislation and rules that will operationalise the Act's provisions.