In a significant legislative initiative to transform India’s maritime logistics, the Merchant Shipping Bill is currently under debate in the Lok Sabha. This bill aims to legally mandate transparency in service charges levied by maritime service providers, addressing long-standing concerns from exporters and importers about opaque pricing practices in containerized cargo movement.
A Transparency-First Framework
The core objective of the proposed bill is to establish a framework where all service providers or agents involved in operating Indian or other vessels in coastal waters (for import, export, or domestic transport) must disclose all charges upfront. This includes both fixed and conditional charges, applicable to all stakeholders such as exporters, importers, consignors, and consignees.
A senior government official clarified that the bill’s intent is solely to ensure the upfront disclosure of charges, not to regulate freight rates, which will continue to be market-determined. The focus is specifically on eliminating hidden or additional charges that often lead to unplanned costs for users.
Empowering the End-User
The bill proposes to empower the Central Government to prescribe the terms and conditions for how these charges must be specified in crucial documents like the Bill of Lading or other transport papers. This provision aims to:
- Ensure Predictability: Users will be able to see and verify all service charges in advance, providing predictability in costs.
- Reduce Disputes: Clear pricing is expected to minimize disputes and unexpected cost escalations.
- Promote Competition: Service providers will be required to publish their charges on public platforms, such as their websites. This accessibility is designed to foster greater competition by enabling users to easily compare prices across different operators.
Accountability Through Penalties
To ensure compliance and deter unfair practices, the bill includes a penalty clause. Any service provider or agent found to be withholding charge disclosures or levying additional fees not explicitly included in the Bill of Lading or other transport documents could face a fine of up to ₹5 lakh. This provision seeks to instill discipline and discourage non-transparent pricing.
Repealing a Legacy, Rewriting the Rules
The Merchant Shipping Bill aims to repeal and replace the existing Merchant Shipping Act of 1958. This legislative overhaul signifies a major shift in regulatory thinking, aligning India’s maritime policy with modern trade realities and global best practices. Beyond transparency in charges, the new bill also seeks to:
- Broaden Ship Ownership: Relax ownership criteria for Indian vessels to attract foreign investment, allowing Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs), joint ventures, and body corporates to own vessels under the Indian flag.
- Facilitate Bareboat Charter Registration: Enable the registration of foreign vessels chartered by Indian entities under bareboat charter cum demise (BBCD) contracts.
- Boost Ship Recycling: Provide for temporary registration of vessels intended for recycling in India.
- Enhance Seafarer Welfare: Holistically adopt regulations from the Maritime Labour Convention (MLC) of the International Labour Organisation (ILO), mandating rules for service conditions, health protection, social security, and repatriation of seafarers, including provisions for abandoned seafarers.
- Improve Maritime Training: Empower the Director-General to regulate maritime education and training, approving institutes and courses to meet international standards.
- Strengthen Pollution Prevention: Incorporate provisions for active enforcement of pollution prevention standards, including monitoring, inspection, and powers to deny entry or detain polluting vessels, aligning with IMO requirements.
This legislative change is considered both timely and transformative for India’s global trade, as the maritime sector handles over 95% of the country’s trade by volume. As India strives to become a global logistics hub under the PM Gati Shakti initiative, creating a fair, transparent, and predictable maritime environment is deemed essential.
The Road Ahead
While the proposed bill has generally been well-received by industry stakeholders, its successful implementation will hinge on clear rules and a robust enforcement mechanism. The establishment of clear notifications, an effective grievance resolution process, and the deployment of digital tools to support charge disclosure will be crucial for translating the bill’s objectives into tangible benefits for the Indian maritime trade. If effectively enacted, the Merchant Shipping Bill could set a precedent for transparency-focused reforms across other transport and logistics sectors in India.
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Source: Logistics Insider
