Govt moves to exempt VSA's among container lines
01 Oct 2024
2 Min Read
CW Team
The Union government is contemplating exempting global container shipping lines from India's antitrust laws, provided that at least 5% of the capacity on any given route, measured in twenty-foot equivalent units (TEUs), is serviced by Indian-flagged vessels. The initiative is intended to bolster the participation of local fleet owners in the highly exclusive mainline container shipping sector, which is currently dominated by international carriers such as Mediterranean Shipping Company, Maersk, CMA CGM, and others.
Vessel sharing agreements among container lines have been exempt from Section 3 of India's Competition Act since 2012, with the most recent exemption expiring in July. These agreements are monitored by the Directorate General of Shipping, India's maritime regulatory body, and are only valid if they do not involve anti-competitive practices like price fixing or capacity limitation. A government official, speaking anonymously, indicated that foreign shipping lines would need to ensure Indian participation to maintain this exemption, and failing to comply could result in scrutiny by the Competition Commission of India. The official highlighted that this measure would provide Indian fleet owners with opportunities to invest in container ships and play a more prominent role in international shipping routes.
The Shipping Corporation of India Ltd (SCI), currently India鈥檚 only mainline container ship operator, owns two container ships and leases two others. One of these vessels is part of a weekly service run by Mediterranean Shipping Company between India and Europe, with SCI contributing just one vessel to the service. Exporters have long been advocating for the establishment of a national container shipping company, citing concerns over foreign carriers' inconsistent service, particularly during periods of market volatility and rising freight rates. This situation has been exacerbated by geopolitical tensions and the impact of the Red Sea crisis on global shipping.
The Union government is contemplating exempting global container shipping lines from India's antitrust laws, provided that at least 5% of the capacity on any given route, measured in twenty-foot equivalent units (TEUs), is serviced by Indian-flagged vessels. The initiative is intended to bolster the participation of local fleet owners in the highly exclusive mainline container shipping sector, which is currently dominated by international carriers such as Mediterranean Shipping Company, Maersk, CMA CGM, and others.
Vessel sharing agreements among container lines have been exempt from Section 3 of India's Competition Act since 2012, with the most recent exemption expiring in July. These agreements are monitored by the Directorate General of Shipping, India's maritime regulatory body, and are only valid if they do not involve anti-competitive practices like price fixing or capacity limitation. A government official, speaking anonymously, indicated that foreign shipping lines would need to ensure Indian participation to maintain this exemption, and failing to comply could result in scrutiny by the Competition Commission of India. The official highlighted that this measure would provide Indian fleet owners with opportunities to invest in container ships and play a more prominent role in international shipping routes.
The Shipping Corporation of India Ltd (SCI), currently India鈥檚 only mainline container ship operator, owns two container ships and leases two others. One of these vessels is part of a weekly service run by Mediterranean Shipping Company between India and Europe, with SCI contributing just one vessel to the service. Exporters have long been advocating for the establishment of a national container shipping company, citing concerns over foreign carriers' inconsistent service, particularly during periods of market volatility and rising freight rates. This situation has been exacerbated by geopolitical tensions and the impact of the Red Sea crisis on global shipping.
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