Coastal Shipping Act, 2025

Key Takeaways

• The Coastal Shipping Act, 2025 creates a separate legal framework for regulating coastal shipping and coasting trade in India and replaces most of Part XIV of the Merchant Shipping Act, 1958.
• The Act generally requires vessels other than Indian vessels to obtain a licence from the Director-General before engaging in coasting trade in Indian coastal waters.
• Indian vessels are not subject to the same licensing requirement for coasting trade, although reporting obligations apply to every vessel, including Indian vessels engaged in coasting trade.
• The Act introduces a National Coastal and Inland Shipping Strategic Plan and a National Database of Coastal Shipping to support planning, transparency and development of the sector.
• Separate licensing rules apply to certain chartered vessels used for purposes other than coasting trade, including vessels chartered by Indian citizens, NRIs, OCIs and specified entities.
• Serious violations can attract imprisonment, substantial fines and detention of vessels, while other contraventions may result in civil penalties and adjudication by the principal officer.
• The Act also gives significant powers to the Director-General and the Central Government to issue directions, seek information, grant exemptions, frame rules and regulate vessels in the interests of shipping, security, safety and the environment.

What Is the Coastal Shipping Act, 2025?

The Coastal Shipping Act, 2025 is a central legislation that consolidates and amends the law relating to regulation of coastal shipping in India. Its broader purpose is to promote coasting trade, encourage domestic participation and strengthen India’s coastal fleet for national security and commercial requirements.

The Act was enacted as Act No. 20 of 2025 and came into force on 15 March 2026 through a notification issued by the Central Government.

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The legislation is important because coastal shipping forms a significant part of India’s maritime transport system. India has a long coastline and is located close to major global shipping routes. Coastal maritime transport is also recognised as a comparatively economical mode of transport for goods and passengers.

The Act forms an important part of the wider framework of shipping laws in India and seeks to provide a more focused regulatory structure than the earlier system, under which different categories of vessels were regulated through different laws.

Why Was the Coastal Shipping Act, 2025 Introduced?

The earlier regulatory structure for coastal maritime transport was not completely uniform.

Non-mechanised vessels engaged in coastwise trade were governed by the Coasting Vessels Act, 1838, while mechanised vessels came within the Merchant Shipping Act, 1958. The legislative background also identified concerns relating to regulation, safety, security and pollution prevention.

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The earlier licensing system under Part XIV of the Merchant Shipping Act, 1958 required Indian ships, ships chartered by Indian citizens and foreign vessels to obtain licences before taking ships to sea, including for coasting trade. The legislative policy behind the new Act was to remove certain regulatory barriers while strengthening control over vessels where necessary.

The Act therefore aims to:

• create a dedicated coastal shipping law;
• promote greater participation of Indian vessels;
• bring relevant offshore service vessels within the regulatory framework;
• streamline licensing requirements;
• improve transparency through a national database;
• support long-term coastal and inland shipping planning; and
• strengthen enforcement, penalties and regulatory oversight.

Where Does the Coastal Shipping Act Apply?

Section 1 provides the territorial and operational scope of the Act.

The Act applies to:

• every vessel other than an Indian vessel that is engaged in coasting trade, irrespective of the residence or domicile of the owner;
• every chartered vessel covered by Chapter IV; and
• the coastal waters of India.

The scope is therefore not limited only to foreign vessels physically registered outside India. It also extends to specified chartered vessels and activities occurring within coastal waters as defined under the Act.

What Is Coasting Trade?

Section 2 defines coasting trade as the carriage of goods or passengers by sea from any port or place in India to another port or place in India.

The definition also includes the performance of any service within coastal waters. Fishing of any kind is expressly excluded.

The expression “service” is wide and includes:

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• exploration;
• exploitation;
• research; and
• other commercial activity carried out in coastal waters, other than the carriage of goods or passengers by sea.

This wider definition is significant because offshore vessels may perform commercial functions without actually transporting cargo or passengers. The Act brings such activities within the concept of coasting trade.

What Are Coastal Waters?

“Coastal waters” include parts of India’s territorial waters as well as adjoining maritime zones within the framework of the Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones Act, 1976, where coasting trade is undertaken.

The Central Government may also notify any port or place, including inland waters of India, as part of coastal waters for the purposes of the Act.

This allows the regulatory framework to extend, where necessary, beyond conventional sea routes and integrate coastal shipping with inland waterways.

What Is an Indian Vessel?

An Indian vessel means a vessel registered in India under the Merchant Shipping Act, 1958.

The distinction between Indian and non-Indian vessels is important because the principal licensing prohibition under Section 3 applies to vessels other than Indian vessels.

Which Vessels Need a Licence for Coasting Trade?

Section 3 provides the basic licensing rule.

No vessel other than an Indian vessel can engage in coasting trade in coastal waters unless a licence has been granted by the Director-General under Section 4.

The Director-General may, however, permit a vessel registered under the Inland Vessels Act, 2021 to engage in coasting trade to the extent and subject to the conditions specified in the order.

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Section 3 also places responsibility on a person who engages another person to undertake coasting trade. Such person must ensure that the person engaged does not violate the licensing requirement.

How Is a Licence for Coasting Trade Granted?

An application for a coasting trade licence must be made to the Director-General in the prescribed form and manner and on payment of the prescribed fee.

Factors Considered Before Granting a Licence

The Director-General must consider several factors before issuing a licence, including:

• whether the applicant previously held a licence that was cancelled;
• earlier violations of the Act;
• citizenship of the crew;
• build requirements of the vessel;
• availability of vessels on the route;
• existing licences for the same route;
• safety and national or maritime security concerns;
• equipment available on board;
• the National Coastal and Inland Shipping Strategic Plan;
• cost efficiency of transport;
• validity of vessel and crew certificates;
• validity of the vessel’s insurance certificate; and
• any additional requirement considered necessary to further the objectives of the Act.

The licence may be granted for a prescribed period and subject to prescribed conditions. The Director-General may also impose additional conditions by recording reasons in writing.

When Can a Coasting Trade Licence Be Suspended or Revoked?

Section 5 empowers the Director-General to suspend, revoke or modify a licence where circumstances require such action to meet the objectives of the Act.

This may occur when the licensee or a person engaged by the licensee:

• violates a licence condition;
• fails to comply with a legal requirement applicable to the vessel;
• fails to comply with a direction issued under Section 35; or
• fails to pay a fine or undergo a sentence imposed under the Act.

A licence cannot ordinarily be suspended, revoked or modified without giving the licensee a reasonable opportunity of being heard. This procedural safeguard reflects the principles of natural justice, particularly the requirement that a person affected by an adverse administrative decision should receive a fair opportunity to present a case.

Where a licence expires or is revoked, the licensee must return the licence and stop engaging in coasting trade within the period specified by the Director-General.

What Are the Reporting Requirements for Vessels?

Section 6 applies reporting obligations to every vessel, including Indian vessels, engaged in coasting trade.

The vessel must report information to the Director-General relating to:

• ports proposed to be visited;
• goods or passengers carried;
• ports or places where goods or passengers will be dropped;
• offshore areas where the vessel may operate or navigate; and
• any other information considered necessary by the Director-General.

These reporting requirements support regulatory oversight and also feed into the national coastal shipping database.

Can a Vessel Be Denied Port Clearance?

Yes.

A proper officer cannot grant clearance to a vessel other than an Indian vessel engaged in coasting trade unless the licensee or agent produces the licence granted under Section 4.

Where a vessel fails to comply with the Act, the Director-General, principal officer or another authorised officer may order detention of the vessel after giving the licensee or agent an opportunity of being heard and recording reasons in writing.

What Is the National Coastal and Inland Shipping Strategic Plan?

Section 8 requires the Central Government to publish a National Coastal and Inland Shipping Strategic Plan within two years from the commencement of the Act.

The Plan must thereafter be updated every two years.

What Will the Strategic Plan Cover?

The Plan must address matters such as:

• condition of coastal shipping routes;
• integration of coastal routes with inland waterways;
• operational improvements;
• long-term traffic forecasts;
• best practices for improving coastal shipping;
• identification of new routes;
• measures to promote construction, registration and participation of Indian vessels; and
• conditions under which vessels registered under the Inland Vessels Act, 2021 may participate in coasting trade.

A committee headed by the Director-General of Shipping is responsible for preparing the draft Plan. It also includes representatives from the Inland Waterways Authority of India, major ports, National Security Council Secretariat, State maritime bodies, ship owners and seafarers.

The approved Strategic Plan must be made publicly available on the Central Government’s website.

What Is the National Database of Coastal Shipping?

Section 9 requires the Director-General to maintain a web portal known as the National Database of Coastal Shipping.

The database must contain information relating to:

• applications for licences;
• licences granted;
• licence conditions;
• routes, voyages and services;
• applicant requirements;
• expired and revoked licences;
• information reported under Section 6; and
• other information considered appropriate by the Director-General.

The database must be available electronically for public access and updated every month.

This provision introduces a transparency-oriented mechanism into coastal shipping regulation.

What Are the Rules for Chartered Vessels?

Chapter IV deals with sea-going vessels chartered by specified Indian-connected persons and entities for purposes other than coasting trade.

It applies to vessels chartered by:

• citizens of India;
• non-resident Indians;
• overseas citizens of India;
• companies;
• co-operative societies;
• limited liability partnerships; and
• other entities notified by the Central Government.

A vessel other than an Indian vessel covered by this Chapter cannot generally be taken to sea without a licence from the Director-General.

An exception applies where a vessel chartered by an overseas citizen of India is operated exclusively outside India.

A licence may be a general licence or may apply for a specified period or voyage.

What Are the Main Offences and Penalties Under the Act?

The Act creates both criminal offences and civil penalty provisions.

Illegal Participation in Coasting Trade

Engaging in coasting trade in violation of Section 3 may result in imprisonment of up to six months, or a fine extending to ₹15 lakh or four times the value of fees, commission or payments received for the voyage, whichever is greater, or both. The vessel may also be detained.

Trading After the Licence Ceases to Be Valid

Continuing coasting trade after a licence has ceased to be valid may attract imprisonment of up to six months, or a fine extending to ₹10 lakh or twice the value of payments received for voyages undertaken in violation, whichever is greater, or both.

Taking a Chartered Vessel to Sea Without a Licence

Taking a vessel to sea in violation of Section 11 may lead to imprisonment of up to six months, or a fine extending to ₹15 lakh or four times the relevant payments received for the voyage, whichever is greater, or both.

False Information and Non-Compliance

Failure to furnish information after notice or knowingly providing materially false information can result in imprisonment of up to six months, fine up to ₹50,000, or both.

Reporting false or misleading information under Section 6 may attract a penalty extending to ₹1 lakh.

Violation of licence conditions may attract a penalty extending to ₹10 lakh or twice the value of payments received for the relevant voyages, whichever is greater.

Can Offences Be Compounded?

Yes. Certain offences under Sections 15 to 20 may be compounded before or after prosecution by an officer designated by the Central Government.

Section 26 operates notwithstanding the Bharatiya Nagarik Suraksha Sanhita, 2023 and permits compounding subject to the conditions laid down in the Coastal Shipping Act.

The amount payable for compounding cannot exceed the maximum fine prescribed for the relevant offence. However, a subsequent offence cannot be compounded.

Where compounding occurs before prosecution, prosecution cannot be instituted for that offence. Where it occurs after prosecution has begun, the court must be informed and the accused may be discharged in relation to the compounded offence.

Who Imposes Penalties and Where Can an Appeal Be Filed?

The principal officer acts as the adjudicating officer for penalties under Sections 21 to 25.

A person aggrieved by an order imposing a penalty may file an appeal before the Director-General within 30 days from receipt of the order. The Director-General is required to dispose of the appeal within 30 days from its receipt.

No order can be passed without providing the parties a reasonable opportunity of being heard.

What Powers Does the Director-General Have?

Section 35 gives the Director-General broad regulatory powers over licensed vessels.

Directions may be issued in:

• public interest;
• the interest of Indian shipping;
• the interest of national defence and maritime security; or
• the interest of safety of life at sea and environmental safety.

Directions may concern routes, ports, diversion of vessels, categories of passengers or cargo, priority of loading or unloading and even banning a vessel from entering a port, anchorage or offshore facility in India.

The Director-General may also require licensees or agents to provide information concerning passengers, cargo, freight charges and other prescribed matters.

Can the Government Grant Exemptions?

Section 37 allows the Central Government, or the Director-General with prior approval of the Central Government, to grant exemptions where considered necessary or expedient in the public interest.

Exemptions may apply to:

• vessels or classes of vessels engaged in coasting trade; or
• specified classes of chartered vessels covered by the Act.

Such exemptions may be subject to conditions and may remain valid only for a specified period.

How Can Rules Be Made Under the Coastal Shipping Act?

Section 39 empowers the Central Government to make rules for carrying out the provisions of the Act, subject to previous publication.

The matters that may be prescribed include the form and manner of licence applications, licence fees, categories and conditions of licences, reporting requirements, operation of the Strategic Plan committee, maintenance of the National Database, compounding procedure and the manner of filing appeals.

Such rule-making powers are an example of delegated legislation, under which Parliament lays down the principal statutory framework while authorising the executive to prescribe detailed rules required for its implementation.

Section 40 further provides for parliamentary control. Rules and notifications made under the Act must be laid before both Houses of Parliament for the prescribed period, and Parliament may modify or annul them.

What Happened to the Earlier Merchant Shipping Act Provisions?

Section 42 repeals Part XIV of the Merchant Shipping Act, 1958, except Section 411A.

However, the Act contains detailed savings provisions.

Existing rules, orders, notifications, exemptions and licences under the repealed provisions continue to operate until they are revoked or expire. Existing offices, appointments, proceedings, inspections and investigations are also preserved in accordance with Section 42.

The provision further preserves the operation of Section 6 of the General Clauses Act, 1897 in relation to the effect of repeal. This helps maintain legal continuity in respect of rights, liabilities and proceedings connected with the repealed framework.

Importance of the Coastal Shipping Act, 2025

The Coastal Shipping Act, 2025 represents a significant restructuring of India’s legal framework for coastal maritime transport.

Its importance lies in several areas.

• First, it creates a dedicated legal regime for coastal shipping instead of relying primarily on provisions contained within the wider Merchant Shipping Act.
• Second, it seeks to promote Indian participation by removing the general coasting trade licensing requirement for Indian vessels while retaining regulatory reporting obligations.
• Third, it recognises modern offshore commercial activities by including certain services within the definition of coasting trade.
• Fourth, it integrates regulation with long-term infrastructure and policy planning through the Strategic Plan.
• Fifth, the National Database introduces a structured transparency mechanism for licensing, routes and coastal shipping information.
• Finally, the Act combines regulatory flexibility with stronger enforcement through licensing controls, vessel detention, financial penalties, imprisonment and administrative adjudication.

Conclusion

The Coastal Shipping Act, 2025 provides a comprehensive statutory framework for the regulation and development of coastal shipping in India. It addresses licensing, vessel operations, chartered vessels, reporting requirements, strategic planning, transparency, offences, penalties, adjudication and government oversight within a single legislation.

The Act also reflects a broader policy shift towards promoting Indian vessels, improving coastal transport efficiency and strengthening maritime security and regulatory transparency. By repealing most of the earlier Part XIV framework under the Merchant Shipping Act, 1958 and introducing dedicated mechanisms such as the National Coastal and Inland Shipping Strategic Plan and National Database of Coastal Shipping, the legislation establishes a more specialised framework for India’s growing coastal maritime sector.