India’s Maritime Reforms: A Reassessment

Context

India’s recent maritime reforms represent a significant legislative overhaul aiming to modernize outdated maritime laws and align India’s shipping regulations with global standards. However, while these reforms mark progress, they also raise critical concerns regarding federal balance, regulatory clarity, and potential vulnerabilities to India’s maritime sovereignty and smaller domestic operators.

Introduction: Overview of Recent Maritime Reforms

In 2025, India introduced several new laws including the Indian Ports Bill, the Merchant Shipping Act, the Coastal Shipping Act, and the Carriage of Goods by Sea Bill. These were designed to replace century-old laws such as the Ports Act of 1908 and to create a streamlined regulatory framework to facilitate easier business operations, boost investment, and enhance India’s competitive position in global maritime trade. The legislative package aims at improving governance, updating ownership and safety standards, and clarifying cabotage (coastal shipping) rules.

Key Features of the Maritime Reform Package

• Indian Ports Bill, 2025: Repeals the 1908 Act, establishing a Maritime State Development Council with centralized powers over port development that reduce state autonomy but aim to ensure cohesive maritime policy and sustainable port growth.
• Merchant Shipping Act, 2025: Modernizes vessel registration and ownership rules, introducing the possibility of partial foreign ownership and new registration mechanisms like Bareboat Charter-Cum-Demise (BBCD).
• Coastal Shipping Act, 2025: Reaffirms cabotage rights that Indian-flagged vessels manage domestic coastal trade but grants the central government broad discretion to license foreign vessels under vague criteria like “national security”.

Concerns Over Centralization and Federal Balance

• A primary critique centers on the centralization of authority through the Maritime State Development Council, which overrides the traditional autonomy of coastal states in port planning and governance. 
• This central control diminishes states’ fiscal independence and local priority-setting, undermining cooperative federalism and reducing states to implementers of central schemes such as Sagarmala and Gati Shakti. 
• Critics argue this weakens the federal compact vital to India’s maritime governance.

Ownership Loopholes and Maritime Sovereignty Risks

• The Merchant Shipping Act alters the strict Indian ownership norms of vessels, permitting partial foreign and Overseas Citizen of India (OCI) ownership without clear legislative thresholds. 
• This ambiguity may allow foreign entities de facto control over Indian-flagged vessels, raising sovereignty and security concerns. 
• The introduction of BBCD registrations similarly risks foreign lessors retaining control via lease arrangements. Such dilutions could lead to “flag-of-convenience” scenarios detrimental to India’s maritime security.

Impact on Smaller Operators and Dispute Resolution

• Another significant issue is the burden these reforms place on small domestic port and coastal shipping operators. 
• Vague compliance requirements and discretionary executive powers may overwhelm smaller players, limiting competition and access. 
• Moreover, dispute resolution mechanisms in port governance now exclude civil courts in favor of internal, potentially biased committees, eroding impartiality and investor confidence.

Coastal Shipping Ambiguities and National Security Claims

While coastal shipping regulation theoretically protects Indian operators, broad licensing powers vested in the central government can restrict foreign vessel access arbitrarily under broad grounds like “strategic alignment” and “national security.” This lack of clear legal criteria poses risks both to fair competition and to transparency in regulatory enforcement. It also places additional reporting burdens on small operators without clarifying data usage or safeguards.

Balancing Reform and Risks: Conclusion

India’s maritime reforms are a necessary step to modernize an antiquated legal framework and improve the country’s maritime infrastructure, governance, and global competitiveness. However, these reforms need course correction to avoid undermining federalism, sovereignty, and equitable competition. Clear, legislated ownership and licensing thresholds are crucial to prevent foreign dominance and flag loopholes. Federal cooperation should be strengthened by involving states meaningfully in maritime governance rather than sidelining them. Finally, dispute resolution must safeguard judicial independence to protect smaller operators and maintain investor confidence.

Source: The Hindu

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