Coastal Shipping Act, 2025: Modernising India’s Maritime Trade and Coastal Economy

India’s maritime sector has entered a decisive phase of reform with the passage of the Coastal Shipping Act, 2025 (the “Act”) by the Parliament. Cleared by the Lok Sabha on April 3, 2025, and later by the Rajya Sabha through a voice vote, the legislation received the Presidential assent on August 9, 2025. Carved out of Part XIV of the Merchant Shipping Act, 1958, the Act marks a shift towards a standalone and modernized framework for coastal shipping.

By consolidating provisions into six chapters and 42 clauses, the Act simplifies compliance for Indian vessels, regulates foreign participation, and mandates long-term strategic planning. The law is positioned as a key enabler of supply chain security, logistics efficiency, and domestic participation in the maritime economy, aligning with the government’s Maritime India Vision 2030 and Amrit Kaal Maritime Vision 2047.

The Act eliminates the requirement for a general trading license for Indian-flag vessels. This makes it easier for Indian entrepreneurs to operate ships, whether through ownership or chartering. The aim is to increase the number of Indian vessels in coastal trade, strengthening domestic capacity.

Foreign-flag vessels, however, must obtain a license from the Director General of Shipping before entering coastal trade. The Director General is empowered to impose conditions, such as employing Indian crew or encouraging shipbuilding in India, balancing foreign participation with national interests.

India has long relied on foreign ships for coastal trade, which exposes supply chains to external shocks. By encouraging Indian registration and participation, the Act reduces dependence on foreign-flag vessels.

The target of 230 million tonnes of coastal cargo by 2030 highlights the government’s ambition to expand this mode of transport. Greater reliance on coastal shipping will reduce congestion on roads and railways, cut emissions, and lower overall logistics costs.

A standout provision is the mandate for a National Coastal and Inland Shipping Strategic Plan, to be prepared within two years of the law coming into force. This plan will integrate inland waterways with coastal routes, enabling seamless movement of goods across different modes.

By linking rivers, canals, and the coastline, India can create a multimodal logistics ecosystem, reducing transport bottlenecks and supporting economic growth across coastal states.

The Act introduces a National Database for Coastal Shipping to provide real-time, authentic data on vessels, routes, and licensing. For investors and industry stakeholders, this improves transparency and reduces uncertainty.

Access to reliable data will help potential investors align with government priorities, encouraging private capital in shipping, shipbuilding, and related infrastructure. This database is expected to strengthen policy visibility and foster greater confidence in India’s maritime ecosystem.

To ensure effective enforcement, the Act revises outdated penalties from the 1958 law. For instance, fines for operating without a license, once capped at ₹1,000, are now raised to ₹15 lakh or four times the value of the payment received, whichever is higher.

The emphasis is on monetary penalties rather than imprisonment, except in serious cases. This balance enhances compliance while ensuring India remains a competitive and attractive environment for shipping businesses.

The Coastal Shipping Act, 2025 marks a turning point for India’s maritime sector. With six chapters and 42 clauses, it introduces simplified licensing, strategic planning, modern enforcement, and greater transparency. The law is expected to make coastal trade more efficient, competitive, and resilient.

As India works towards its vision of Atmanirbhar Bharat and Viksit Bharat, this legislation strengthens the maritime foundation of the economy. By unlocking the potential of its 11,098 km coastline, India is building a future-ready shipping ecosystem that supports growth, sustainability, and global competitiveness.