India risks losing a significant share of its container transshipment cargo to foreign ports if the cabotage waiver for foreign-flagged vessels is not continued, according to the Container Shipping Lines Association (CSLA).
The industry body has cautioned that rolling back the relaxation could divert Indian-origin cargo to established regional hubs such as Port of Colombo, Port Klang and Jebel Ali Port, which already handle a large portion of India’s transshipment volumes.
The cabotage rules, governed under the Merchant Shipping Act, were relaxed in 2018 to allow foreign-flag vessels to carry transshipment containers between Indian ports without restrictions. The move was aimed at boosting India’s ambition to develop its own transshipment hubs and reduce dependency on overseas ports.
According to CSLA, the relaxation has helped attract mainline vessel calls and improve connectivity at key Indian gateways, particularly at emerging hubs like Vizhinjam International Seaport and established ports such as Jawaharlal Nehru Port.
However, the association warned that any policy uncertainty could discourage global carriers from routing services through Indian ports. Transshipment decisions, it noted, are highly sensitive to operational flexibility, turnaround times, and regulatory clarity. Without the waiver, carriers may prefer routing cargo via foreign hubs that offer seamless coastal movement and fewer compliance hurdles.
CSLA has urged the government to provide long-term policy stability to strengthen India’s position as a regional maritime hub. Sustaining the cabotage relaxation, the body argued, would support investments in port infrastructure, improve economies of scale, and help retain value-added logistics activities within the country.
Industry stakeholders believe that with continued regulatory support, India has the potential to significantly increase its share of regional transshipment volumes and reduce outflow of cargo to competing ports.