Source: The post New maritime laws modernise India yet threaten federal autonomy has been created, based on the article “India’s recent maritime reforms need course correction” published in “The Hindu ” on 4 September 2025. New Maritime Laws Modernise India Yet Threaten Federal Autonomy.
UPSC Syllabus Topic: GS Paper 3- Infrastructures.
Context: On August 18, the Raj Sabha passed the Indian Ports Bill, 2025, replacing the 1908 Act. It accompanies the Coastal Shipping Act, the Carriage of Goods by Sea Bill, and the Merchant Shipping Act. Together they seek to modernise maritime regulation and align India with global practices.
For detailed information on India’s efforts to develop its maritime sector read this article here
Why does the package matter?
- Modernisation push: India’s maritime laws are fragmented and outdated. Finance, offshore activity, and global conventions have outpaced existing frameworks. System upgrades are necessary for global competitiveness.
2. Promised benefits: The Ports Act is presented as facilitative. It aims to improve ease of doing business, promote sustainable port development, and replace fragmented rules with a coherent, predictable framework.
3. Process concern: Passage without deep debate or committee review raises concerns about consensus and scrutiny. This weakens legitimacy for sweeping sectoral reform.
How does the Ports Act reshape Centre–State relations?
- Centralised policymaking: The Maritime State Development Council, chaired by the Union Ports Minister, can direct States to follow central guidelines.
2. From cooperation to subordination: Critics see subordination, with States required to align with Sagarmala and PM Gati Shakti.
3. Reduced State flexibility: State maritime boards cannot change frameworks without central approval, shrinking fiscal autonomy and policy room.
4. Responsibilities without power: Coastal States remain burdened with port management, yet lose discretion over development choices.
Where do regulatory and dispute rules falter?
- Vague discretion: New, discretionary regulatory powers risk uneven application and heavier compliance for smaller operators.
2. Courts barred: Clause 17 bars civil courts from hearing port-related disputes and routes parties to internal dispute-resolution committees created by the same authorities they contest. Experts warn that removing impartial, independent judicial review can deter private investment and erode trust in the regulatory system, even if other reforms appear business-friendly.
What risks arise under the Merchant Shipping Act, 2025?
- Useful updates: The law expands vessel definitions, tightens oversight of training institutes, and aligns liability and insurance with conventions.
2. Ownership dilution: Earlier, Indian-flagged vessels had to be fully Indian-owned. Now “partial” Indian ownership is allowed, with thresholds left to notification.
3. Leasing loophole: Bareboat Charter-Cum-Demise is recognised. Without strict rules, foreign lessors may retain control despite nominal transfers.
4. Small operator burden: All vessels must register, regardless of size or propulsion, adding bureaucracy and compliance strain.
How could the Coastal Shipping Act affect competition?
- Cabotage rule and its purpose: The Act clarifies that domestic coastal trade is reserved for Indian-flagged vessels. This is meant to protect and strengthen national coastal shipping.
- Discretion to admit foreign vessels: The Director General of Shipping gets broad powers to license foreign vessels on open-ended grounds such as “national security” or “alignment with strategic plans.” These vague criteria can enable arbitrary or selective entry, creating uncertainty for domestic competitors.
- Compliance load on small operators: Small players, including those in the fishing sector, face mandatory voyage and cargo reporting. The law gives no clear guidance on how such data will be used or protected, raising compliance burdens and trust concerns for operators with limited resources.
- Central planning vs local autonomy: Opposition MPs caution that the Act, together with the centrally mandated National Coastal and Inland Shipping Strategic Plan, concentrates control with the Centre. They argue this can sideline local priorities and weaken the autonomy of coastal communities and smaller operators, even as these groups bear day-to-day operational responsibilities.
What course corrections are needed?
- Modernise without overreach: Reform must protect federal balance and fair competition.
2. Legislate core thresholds: Ownership and licensing thresholds should be set in law, not left to executive discretion.
3. Restore independence: Ensure impartial judicial review and meaningful State participation in planning.
4. Long-term stakes: As drafted, benefits may accrue to a few while weakening the federal compact and maritime security.
Question for practice:
Examine whether India’s 2025 maritime laws modernise shipping while protecting federal autonomy, clear ownership rules, impartial dispute resolution, and fair competition.
