Govt mulls allowing foreign vessels in coastal waters

Government proposes to amend Cabotage rules to allow foreign vessels to operate in Indian coastal waters


The government is considering a proposal to permit foreign vessels to operate in Indian coastal waters with a view to reduce logistics cost, enhance port efficiency and boost domestic shipping industry. The move would facilitate transportation of cargo between different ports along the country’s coastline.

Currently, the Cabotage rules, which governs this activity, makes it difficult for foreign flagged vessels to handle cargo between two domestic ports.

Why is this important

The proposed amendment to the Cabotage rule would allow foreign vessels to operate in Indian coastal waters which would not only improve the competition among the ports and improve their efficiency but also will bring down the shipping rates.

Stocks to be positively impacted

With the efficiency of ports to be improved we expect a positive impact on Adani Ports and Special Economic Zone (CMP: Rs. 369, MCap: Rs. 76,355 crs, FY2020 PE: 16.7), Gujarat Pipavav Port Ltd (CMP: Rs.125, MCap: Rs. 6076 crs, Fy2020 PE : 18.5)

Stocks to be negatively impacted

With an expected shipping rates correction, we expect a negative impact on shipping companies such as Shipping Corporation India (CMP: Rs. 63, MCap: Rs. 2935 crs, FY2020 PE: 10), Shreyas Shipping (CMP Rs. 516, MCap: Rs. 1122 crs., TTM PE: 24.6)

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