Relaxation to cabotage rules vital

THIRUVANANTHAPURAM: If it’s the Vallarpadam International Container Transshipment Terminal (ICTT) that is now floundering due to Cabotage Rules, it could be joined by the proposed Vizhinjam ICTT project also in future if appropriate relaxations to the Rules are not obtained.  Chief Minister Oommen Chandy’s assurance in Kochi on Sunday that the State Government had urged the Shipping Ministry to relax the rules could, in fact, prove a matter of life and death for Vizhinjam. Project consultants International Finance Corporation (IFC) had warned Kerala, as far back as September 2010, that the Vizhinjam project would `remain a non-starter’ if relaxation was not forthcoming. A `Strategic Options Report,’ which the IFC submitted to the government at the time, recommended that Vizhinjam Port should be notified as a Special Economic Zone (SEZ) ``so that exemptions to Cabotage Rules, similar to those expected at Vallarpadam, can be obtained with greater certainty.’’  Section 407 of the Merchant Shipping Act, 1958, deals with Cabotage. Intended to protect Indian shipping, it permits only Indian flag vessels from conducting feeder services between Indian Ports.   In October 2010, the Vizhinjam International Seaport Ltd (VISL), the State Government firm overseeing the project, had written to the State Government to petition the Centre at the `appropriate stage of development’ to seek relaxation from Cabotage. ``It is a general issue and is not confined to Vallarpadam ICTT alone,’’  Ports Secretary Manoj Joshi said. ``If Vallarpadam is exempted, it will automatically be applicable to Vizhinjam also.’’ However, the IFC report also states that the argument put forth by Cochin Port Trust for obtaining exemption from Cabotage - that cargo arriving at Vallarpadam should not be treated as domestic cargo as the port was within an SEZ and customs checks occur only at the ports of origin and destination `may not be tenable.’ According to the IFC report, wherever the origin of the cargo, the very fact that a ship is undertaking coasting trade in Indian waters is sufficient to attract Cabotage Rules.