The passage of the Indian Ports Bill, 2025 in the Rajya Sabha, on August 18, marks a pivotal moment in India’s maritime legislative history. Intended to repeal and replace the Act of 1908, it comes alongside the newly enacted Coastal Shipping Act, 2025, the Carriage of Goods by Sea Bill, 2025, and the Merchant Shipping Act, 2025, a legislative package that the government hails as critical to streamlining maritime governance and bringing India’s shipping regulation in line with global practices.
Progress but with pitfalls
At first glance, these new laws represent a comprehensive attempt to modernise India’s maritime governance. India’s maritime regulation is fragmented and outdated, with modern shipping finance, offshore operations and international conventions long having outpaced the legal and operational frameworks in place. For India to expand its trade, attract foreign investment and enhance its maritime standing, aligning with global best practices is indeed necessary. In particular, the Indian Ports Act has been hailed as a facilitative law — one that enables ease of business, promotes sustainable port development, and brings coherence to India’s otherwise disjointed regulatory environment. Even so, the Bill’s passage without a serious parliamentary debate or referral to a standing committee raises questions, underlining the absence of political consensus and public scrutiny.
Notably, the Ports Act, 2025, has been criticised for centralising power at the expense of the States, diluting safeguards meant to protect Indian sovereignty. Critics point to its main feature, the Maritime State Development Council (chaired by the Union Minister of Ports) as a centralised policy-making authority with the power to direct States to follow central guidelines. Far from an illustration of cooperative federalism, they contend, the new Ports Act is an example of federal subordination, designed to ensure that States align their port development with central plans, such as Sagarmala and PM Gati Shakti regardless of their own priorities. Critics point to the Maritime State Development Council’s structure and intent, where State maritime boards cannot adjust their own frameworks without central approval, as stripping coastal States of fiscal autonomy and flexibility, even while burdened with tight port management responsibilities.
The criticism is not confined to federal concerns. Experts warn that the new law introduces vague, discretionary regulatory powers that could saddle smaller operators with unmanageable compliance burdens. Equally troubling is the approach to dispute resolution: Clause 17 of the Bill bars civil courts from hearing port-related disputes, forcing parties into internal dispute resolution committees created by the very authorities they are contesting. Analysts caution that the absence of impartial, independent judicial review could deter private investment and erode trust in the regulatory system.
The issue about ownership
The Merchant Shipping Act, 2025, is not free from flaws either. It seeks to modernise registration, ownership rules, safety standards, environmental obligations, and liability frameworks, with some admittedly notable pluses: expanding vessel definitions to cover offshore drilling units and non-displacement crafts; tightening oversight of maritime training institutes; and aligning India’s liability and insurance rules with international conventions. Yet tucked into the fine print is a loophole in ownership safeguards. Under the Merchant Shipping Act, 1958, Indian-flagged vessels had to be fully Indian-owned. The new Act permits “partly” Indian ownership including by Overseas Citizens of India and foreign entities while leaving the actual thresholds to be decided later by government notification.
The law also formally recognises Bareboat Charter-Cum-Demise (BBCD) registration, intended to let Indian operators lease foreign vessels with a view to eventual ownership. While legitimate as a global financing tool, the BBCD could test India’s regulatory capacity to ensure that transfers actually occur. Without clear, enforceable rules, foreign lessors may retain effective control indefinitely. Further, the Act mandates registration of all vessels, regardless of size or propulsion, without regard to the bureaucratic burdens that this places on small operators. What is most troubling is that it hands the executive a blank cheque to dilute ownership requirements whenever convenient, raising the risk of India sliding into a flag-of-convenience jurisdiction where foreign owners control ships flying the Indian flag.
Endangering smaller players
The final component of India’s maritime reform package, the Coastal Shipping Act, ostensibly aims to clarify and strengthen cabotage rules, ensuring that only Indian-flagged vessels engage in domestic coastal trade. Though well-intentioned, it gives the Director General of Shipping sweeping discretion to licence foreign vessels on vague grounds such as “national security” or “alignment with strategic plans” — open-ended clauses that invite arbitrary or selective application. The real burdens are likely to fall on small operators, particularly in the fishing industry, who will struggle to comply with mandatory voyage and cargo reporting requirements in the absence of clear guidance on how such data will be used or protected. Members of Parliament from the Opposition have warned that the Act hands too much control to the Centre, potentially undermining local autonomy — a concern that applies equally to the centrally mandated National Coastal and Inland Shipping Strategic Plan.
None of this is to deny the need for an updated legal framework. India certainly must modernise its maritime legislation. But reform should not come at the expense of federal balance and fair competition. Ownership thresholds and licensing rules ought to be clearly specified in law, not left to executive discretion. As it stands, too many of the provisions are arbitrary — from dispute resolution that lacks judicial independence to excluding States from any meaningful role in planning. These measures may be a beginning, but without significant amendments, they risk delivering ease of doing business for the few while eroding the federal compact and weakening India’s long-term maritime security.
Abhijit Singh is a retired naval officer and the former Head of the Maritime Policy Initiative at the Observer Research Foundation, New Delhi
Published – September 04, 2025 12:08 am IST