Govt may water down Shipping Trade Practices Act

MUMBAI: The proposed Shipping Trade Practices Act (STPA), aimed at regulating the intermediaries in the sector, may be diluted because of the stiff opposition from the various stakeholders of the shipping industry. At a meeting convened by the ministry of shipping early this week, various stakeholders of the shipping industry have demanded a change in some clauses.
The final draft had already received an in-principle approval from the shipping ministry. But industry officials say that the STPA is unlikely to be present in the monsoon session of Parliament, if it undergoes any further modification.

The proposed Act aims to bring in transparency in existing trade practices of logistics service providers — which include shipping lines, airlines, agents, freight forwarders and port operators, among others. It has also proposed to set up a dispute settlement body for trade-related matters. But, the intermediaries fear that some of the clauses may keep several existing players out of business.

“In addition to the mandatory payment of hefty insurance surety, the Act demands a bank guarantee of Rs 5 lakh and a registration with the director general of shipping for a fee of Rs 50,000. The Act also provides for mandatory registration of all intermediaries, and penalties running up to Rs 12.5 lakh for each violation,” said an industry analyst.

“The government may revisit the clauses of STPA, which was presented in the Budget session earlier this year. Along with the ministry, the law and commerce ministries are also involved in the process of making a Cabinet note on the proposed Act,” said sources.

Airlines, shipping lines, shipping agents, freight forwarders, terminal operators, container freight stations, inland container depots, Container Corporation of India (Concor), cargo consolidators, transporters, stevedores and shippers will be monitored under the proposed Act.

SS Kulkarni, general secretary of Indian National Ship Owners’ Association (INSA), said the Act has the potential to damage the growing industry. “We can’t go back to the ancient era. The Act is talking about penalising all players, to tighten the control over some intermediaries. Some clauses need to be diluted, if they want the industry to grow,” he said.

Exporters and importers believe that every shipper has a right to know the rationale of any surcharge imposed by an airline or shipping line or even Concor. According to them, the Act would ensure transparency and quality of service at a competitive and reasonable rate, besides infusing accountability in the industry.