Coastal Shipping Bill & Protection of Interest in Aircraft Objects Bill | 07 Apr 2025

Source: TH 

Why in News?

The Lok Sabha has passed two key legislations- the Coastal Shipping Bill, 2024 and the Protection of Interest in Aircraft Objects Bill, 2025 aimed at strengthening the coastal shipping and aviation sector. 

What is the Coastal Shipping Bill, 2024? 

• About: 
  • It aims to promote cost-effective and sustainable coastal trade, by increasing coastal shipping’s freight share from the current 5% (vs 40% in the EU) by reducing over-reliance on roadways (66%) and railways (31%), thereby lowering logistics costs, traffic congestion, and pollution. 
    • As per MoEFCC (2021), transport contributes 10–11% of India’s GHG emissions, with roads accounting for 90%, rail 3%, and waterways less than 1%.  
      • Waterways are more energy efficient than road and rail, making coastal shipping the most eco-friendly transport mode. 
    • It supports integration with inland waterways and aligns with the National Logistics Policy and Atma Nirbhar Bharat vision. 
• Key Provisions: 
  • Dedicated Legal Framework: The Bill replaces outdated vessel-centric provisions under the Merchant Shipping Act, 1958 with a forward-looking, standalone legislation tailored to Indian conditions.  
    • It establishes a clear, modern legal structure aligned with global cabotage norms and India’s Maritime Amrit Kaal Vision 2047 to unlock the economic potential of the 7,500 km long coastline. 
      • Cabotage refers to transport of goods/passengers between two ports within the same country. 
  • Simplified Licensing Mechanism: It removes the requirement of a general trading license for Indian ships and introduces a structured licensing process for foreign vessels.  
    • The Director General of Shipping is empowered to regulate, monitor, and enforce compliance, ensuring ease of doing business while safeguarding national interests. 
  • Strategic Maritime Vision and Multimodal Integration: The Bill mandates the formulation of a National Coastal and Inland Shipping Strategic Plan, to be revised biennially by a committee comprising representatives from States, ports, and maritime boards.  
    • It fosters region-specific growth, integrates coastal shipping with inland waterways, and promotes efficient, low-emission multimodal transport. 
  • Data-Driven Governance and Transparency: A National Database for Coastal Shipping is proposed to facilitate evidence-based policy, operational coordination, and enhanced transparency.  
    • The Bill also expands eligibility for chartering vessels to NRIs, OCIs, and LLPs to boost private sector involvement. 
  • Cooperative Federalism & Inclusive Governance: The Bill ensures active participation of States and UTs through a multi-stakeholder committee (Clause 8(3)) to guide route planning, infrastructure, and policy, promoting decentralised, inclusive, and locally responsive maritime development. 

What is the State of India’s Maritime Sector? 

• Strategic and Trade Backbone: India ranks as the 16th largest maritime nation, handling 95% of trade by volume and 70% by value, with 12 major and 200+ minor ports positioned along key global shipping routes. 
• Expanding Capacity and Fleet: The cargo-handling capacity of major ports grew by 87% (2014–24), reaching 1,629.86 million tonnes, with 819.22 MT handled in FY24; India operates a fleet of 1,530 registered ships. 
  • India ranks 38 out of 139 countries on World Bank's Logistics Performance Index Report 2023, indicating improved logistics and trade efficiency. 
    • Singapore and Finland are the most efficient and highest-ranked LPI countries as per the 2023 LPI, from which India can learn. 
• Global Ship Recycling Hub: India is the 3rd largest ship recycler globally, holding 30% of the global share, with Alang being the world’s largest ship-breaking yard. 
  • India currently lags in shipbuilding despite its long coastline, but recent initiatives like the New Shipbuilding and Repair Policy aim to strengthen domestic capabilities and position India as a global maritime manufacturing hub. 
• Policy Support and Export Growth: Measures like 100% FDI under the automatic route, 10-year tax holidays, and infrastructure modernization have driven port development and boosted exports to USD 451 billion in FY23. 

What is Protection of Interest in Aircraft Objects Bill, 2025? 

• Objective: 
  • It aims to strengthen legal protection for aircraft financiers and lessors in India by aligning Indian laws with the international conventions. 
• Key Provisions:  
  • Supremacy to International Obligations: The Bill gives an overriding effect to the Cape Town Convention and Aircraft Protocol, superseding domestic laws (like the Insolvency and Bankruptcy Code (IBC)) in case of conflict. 
    • It enables international arbitration mechanisms for resolving disputes, in alignment with the Cape Town Convention. 
      • India signed the Cape Town Convention and its Aircraft Protocol in 2008, but in the absence of parliamentary ratification and enabling legislation, its provisions were not enforceable in Indian courts.  
    • This resulted in high-risk premiums for leasing aircraft to Indian airlines, legal uncertainties during insolvency cases like the Go First crisis, and a poor compliance score with the Aviation Working Group (AWG). 
  • Scope and Coverage: The Act applies to aircraft airframes, engines, helicopters, and other high-value aviation equipment as defined under the Aircraft Protocol. 
  • Streamlined Repossession Procedures: The Bill enables aircraft lessors to repossess leased aircraft and equipment in case of default without court intervention, ensuring faster resolution and asset recovery. 
  • Improved Compliance Score: The Bill enhances India’s compliance with the Cape Town Convention Index (AWG), making Indian airlines eligible for 8-10% lease cost discounts under the Convention. 

What is the State of the Aviation Sector in India? 

• India is the 3rd largest domestic aviation market globally, handling 69% of South Asia’s air traffic, with passenger numbers reaching around 196.91 million. 
• The aviation sector contributes 1.5% to GDP, supports 7.7 million jobs (direct and indirect), and generates USD 53.6 billion in economic output.  
  • Operational airports increased from 74 (2014) to 157 (2024), with a target of 350- 400 by 2047.  
• Aircraft movement rose at a CAGR of 3.85% (FY17–FY24), and multiple greenfield airports and terminals are under development (e.g., Bagdogra Civil Enclave, Dehradun terminal).