Cabotage rules restrict Gujarat cotton mills’ trade with foreign ships

NEW DELHI: Despite all the hype around the Make-in-India campaign, the irony can’t be lost on the cotton mills in Narendra Modi’s Gujarat. For, exporting cotton to China still works out cheaper than shipping goods to Tamil Nadu, the state with the highest demand for cotton. For the southern state too, importing raw material from South Africa is more cost effective than sourcing domestically from Gujarat, the largest cotton producing state.

The Modi government may have pitched hard for the Make-in-India theme, and improved the climate for doing business here, but the fact remains that cotton mills lobby hasn’t got much leeway from the government on allowing foreign ships to engage in coastal trade of cotton. However, the shipping ministry is actively considering the proposal to ease cabotage rules for cotton, a senior government official told.

This, once implemented, would significantly reduce the cost of using the sea route for cotton producers in states like Gujarat and help them get back their competitive edge in terms of pricing. Confederation of Indian Textile Industry and South India Mill Association have urged the government to relax the cabotage - restrictions on coastal movement of foreign ships - for cotton, at least for four months.

“Foreign ships cannot carry coastal cargo. Indian ships have limited capacity and cost more due to tax structures. We are forced to use road transport which is also expensive,” said DK Nair, secretary general of Confederation of Indian Textile Industry. Nair said if the movement from Kandla port to Chennai is eased, it would give a fillip to the sector. There are currently only 15 vessels involved in coastal trade which act as feeder vessels for the mainline ship.

The government had relaxed the cabotage norms for the Dubai Port World-operated International transshipment container terminal at Vallarpadam, Kochi, in Kerala in December 2012, with the aim of boosting export-import trade in India and reducing the transit time. This was opposed by the Indian ship owners since it eased the movement of foreign vessels on the Indian coast.