The Inland Vessels Bill, 2021 that was passed by Lok Sabha on July 21, will help domestic cargo movement with potentially lower rates, which is expected to help small businesses.
The proposed law is in line with the Narendra Modi government’s aim to develop inland ports and harness India’s 7,500km coastline and potentially navigable waterways.
The government expects its programme to create 1 crore new jobs, including direct employment of 40 lakh people, in the next 10 years, reduce logistics costs and speed up cargo movement.
The new law will replace the century-old Inland Vessels Act of 1917 for the regulation of security, safety as well as registration of inland vessels.
What is the Inland Vessel Bill?
Frequently Asked Questions
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The Inland Vessels Bill, 2021 seeks to replace separate rules framed by states with a uniform regulatory framework for inland vessel navigation to support countrywide operation of registered boats, ships, container vessels, sailing vessels and ferries.
However, to operate in the inland waterways, vessels will need a survey certificate, which will be issued by states.
With the new law, the centre will prescribe the minimum number of people that vessels must have, for various roles. Violation of these requirements may attract a penalty of up to Rs 10,000 for the first offence and Rs 25,000 for subsequent offences.
The centre will also prescribe standards for qualification for the crew as well as training, examination and grant of certificate of competency, which indicate the fitness of the recipients to serve in the specified roles. The certificates will be granted by the state governments.
The bill will ensure that vessels follow specifications for signals and equipment to ensure navigation safety including ones pertaining to responding to distress signals.
Further, it requires vessels to have an insurance policy to cover liabilities for death, injury or damage caused due to the usage of the vessel including accidental pollution.
It proposes that all accidents aboard such vessels must be reported to the head officer of the nearest police station and to the state government-appointed authority.
The Inland Vessels Bill 2021 calls for maintaining a central database, an electronic centralised record of data on inland vessels, which will include all information about registration of vessels, vessel crew and certificates issued.
A development fund will be set up for various purposes such as emergency preparedness, containment of pollution and boosting inland water navigation.
It requires each state to constitute such a fund and the sources will include stakeholders, schemes of state governments and collections from the sale of wreck or cargo.
Benefits of the Inland Vessel Bill
Currently, 4,000 kms of inland waterways are operational in the country, with its new bill the government expects to not only promote the development of India's inland shipping fleet but also expects more ports to be developed around the country to promote the use of vessels for cargo.
Ministry of Ports, Shipping and Waterways said that the new bill will reduce the operational bottlenecks in interstate movement of vessels.
However, market experts and analysts are still sceptical about the development of the country's inland waterways.
"The Inland Vessels Bill will definitely promote the use of tourist ferries and smaller ships across India, however, inland waterways in India are ever-changing depending on the seasonality and cargo-carrying ships might not be able to operate on them throughout the year," a market expert from KPMG said.
Similarly, a Mumbai-based senior ports and shipping consultant told Moneycontrol that the country's inland waterways are very underdeveloped at the moment and for industrial use, year-long routes will need to come up in the country.
However, coastal shipping or inland shipping in India may find its niche in the form of Micro, Small and Medium Enterprises that require smaller loads to be transported across the country.
"The implementation of Inland Vessels Bill is expected to boost India's MSME sector and coastal shipping is cheaper and in some cases is faster than road and railway routes," another market expert said.
He said some MSME's can hire vessels to transport goods across India which would ensure no supply bottlenecks in their operations.
Assocham president Vineet Agarwal, the Managing Director of Transport Corp of India said freight rates in India can come down substantially by the use of alternative modes of transport by the industry like rail and coastal shipping.
"The other factor that's a little bit of on the outside is that the mix is also started to change a little bit, instead of all products moving only by roads, products have also started to move by rail and other modes of transport. So, that would really help in terms of reducing freight rates because freight rates on rail and coastal shipping is definitely lower," Agarwal had said.