Merchant shipping bill : A Bold Push for Transparency in India’s Maritime Sector

A Bold Push for Transparency in India’s Maritime Sector

India's maritime sector is undergoing a significant transformation with the introduction of the Merchant Shipping Bill, 2024. This legislation is designed to modernise the country's shipping regulations by replacing the Merchant Shipping Act of 1958. It reflects the government’s broader ambition to make India a global maritime hub through enhanced transparency, efficiency, and alignment with international best practices.

Overhauling an Outdated Framework

The original Merchant Shipping Act was introduced over six decades ago and has since become ill-suited to the demands of modern global trade. The 2024 Bill aims to rectify this by focusing on transparency in port-related charges, simplifying ship registration processes, enhancing digital compliance, and prioritising the welfare of seafarers.

One of the Bill's standout features is its provision that mandates service providers to clearly disclose all charges levied in connection with maritime transport. This includes costs related to port handling, documentation, and agent fees. All such charges must be listed in the Bill of Lading or its equivalent. Any failure to comply can attract penalties of up to five lakh rupees.

Crucially, the Bill does not seek to regulate freight rates, which will continue to be driven by market forces. Instead, it targets the additional surcharges and hidden costs that often frustrate exporters, importers, and logistics operators.

Broadening Ship Ownership and Registration

Another key reform under the Bill is the expanded definition of what constitutes an “Indian vessel.” It now includes ships owned by Non-Resident Indians, Overseas Citizens of India, and Limited Liability Partnerships, among others. This opens the door for broader investment and participation in India’s maritime industry.

Additionally, vessels leased under bareboat charter arrangements can now be registered in India even before the completion of payment. This change is expected to help grow India’s domestic shipping tonnage and reduce dependency on foreign-flagged vessels.

Strengthening Seafarer Welfare

The Bill proposes the creation of a dedicated Seafarer’s Welfare Board to safeguard the interests of maritime workers. This body will advise on matters related to living and working conditions, ensuring that Indian seafarers are protected under international maritime labour standards.

Improved welfare provisions are particularly significant in the context of recent global challenges, such as the COVID-19 pandemic, which exposed the vulnerabilities of seafarers stranded at sea due to port closures and quarantine restrictions.

Embracing Digitalisation

To boost operational efficiency, the Merchant Shipping Bill introduces digital processes for ship registration, certification, and compliance. By replacing paper-based systems, these reforms aim to reduce red tape, eliminate delays, and foster ease of doing business in the maritime sector.

This push towards digital transformation is in alignment with India’s national development programmes that seek to modernise infrastructure and reduce logistical costs.

Complementing Other Maritime Reforms

The Merchant Shipping Bill is one of several legislative efforts to rejuvenate India’s maritime framework. Alongside it are the Carriage of Goods by Sea Bill and the Indian Ports Bill.

The Carriage of Goods by Sea Bill aims to replace the nearly century-old law governing cargo transport. It will bring India’s regulatory framework in line with newer international conventions and offer greater contractual flexibility for shippers and consignees.

Meanwhile, the Indian Ports Bill seeks to provide statutory backing to State Maritime Boards and mandates greater transparency in port tariffs. It also proposes the establishment of a centralised Maritime State Development Council to foster collaboration between state and central authorities.

Together, these three bills form a cohesive legal ecosystem intended to position India as a competitive maritime economy.

Sectoral Benefits and Strategic Impact

The Merchant Shipping Bill is expected to yield multiple benefits:

1. Transparency in Charges: By mandating full disclosure, the Bill aims to eliminate hidden fees and ensure fair practices. This will significantly improve the experience for exporters, importers, and freight forwarders.

2. Growth in Indian Tonnage: Broader eligibility for Indian-flag registration and supportive chartering provisions will boost the domestic shipping fleet, contributing to national economic resilience.

3. Seafarer Confidence: A formal welfare mechanism ensures better oversight and working conditions for India’s large maritime workforce.

4. Efficiency through Technology: Digital workflows will shorten processing times, reduce human error, and make the regulatory system more agile.

Challenges and Future Outlook

Despite its progressive intent, the Bill does face some challenges. The enforcement of penalty clauses will need careful oversight to prevent misuse. Additionally, while the Bill covers disclosure of charges, it does not yet account for the growing use of electronic bills of lading, a matter that may require further legal clarification in future updates.

Moreover, the success of these reforms will depend heavily on the readiness of stakeholders—from ship owners and port operators to customs authorities and freight agents—to embrace change.

Nonetheless, the Merchant Shipping Bill represents a bold step towards creating a more transparent, modern, and efficient maritime sector in India. It addresses long-standing concerns, encourages investment, and aligns India’s legal structure with global norms.

As the country continues to assert itself as a major trading nation, these reforms are likely to play a crucial role in shaping the next chapter of its maritime growth story.

Top 5 Logistics Trends Transforming Indian Trade in 2025

Top 5 Logistics Trends Transforming Indian Trade in 2025

India’s logistics and supply chain sector is undergoing a remarkable transformation in 2025—driven by sustainability mandates, digital innovation, policy reforms, and strategic global partnerships. As the country aims to slash logistics costs and boost export competitiveness, a new ecosystem is emerging—smarter, greener, and more connected than ever before. Here’s a look at the top five developments shaping the future of Indian trade and what they mean for businesses navigating this dynamic landscape.

1. Green & Sustainable Warehousing Goes Mainstream 🌱

India’s warehousing landscape is undergoing a radical shift towards sustainability. Driven by global ESG requirements and multinational demands, developers are embracing energy-efficient building techniques, renewable power, and eco-friendly materials . According to a JLL India study, certified green warehousing space is set to soar from 65 million sq ft in 2024 to 270 million sq ft by 2030—quadrupling in just six years .

Why this matters for trade:

Green infrastructure helps MNCs maintain compliance with global sustainability norms, making India a more attractive sourcing destination.

Reduced operating costs and energy consumption may lead to lower warehousing prices—beneficial for exporters and importers alike.

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2. SMILE Programme & ADB‑financed Overhaul of Multimodal Logistics

India’s ambitious SMILE initiative—Strengthening Multimodal and Integrated Logistics Ecosystem—backed by a US $350 million ADB policy‑based loan, is central to modernising logistics . It fortifies the Gati Shakti Master Plan and National Logistics Policy by:

Boosting connectivity via multimodal hubs.

Standardising warehousing assets.

Promoting digitalisation in external trade.

Investing in gender‑responsive land ports to support women in logistics .

Impact on trade:

Reduces logistics costs (currently ~14 per cent of GDP, with a goal of 9 per cent) .

Strengthens internal networks, improving lead times and export competitiveness.

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3. Major Infrastructure Push: Highways, Ports & Industrial Parks

A series of Cabinet nods for infrastructure developments promise a logistics revolution :

Construction of ~166 km four‑lane highway linking Meghalaya and Assam.

New six‑lane bypass and arterial highways near Zirakpur–Patiala and JNPA Port in Maharashtra.

Establishment of a 25‑acre Panattoni industrial‑logistics park in Hosur, Tamil Nadu with €100 million investment .

Additionally, Tamil Nadu will launch a warehousing policy by October 2025, aimed at strategically clustering agri-logistics and manufacturing warehousing in tier‑2/3 cities .

Why it’s transformative:

Improved road and port connectivity slashes transit times and costs.

Purpose-built industrial parks attract FDI pool and streamline supply chains for manufacturing exports.

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4. Trade Agreements & Shifting Geopolitical Alignments

India has made significant diplomatic strides shaping trade flows:

A landmark FTA with the UK, covering 99 per cent of Indian exports, was agreed earlier in May 2025; ratification expected within months .

Under the Quad Ports of the Future Partnership, India will host an advanced ports and logistics conference in Mumbai (October 2025) alongside Australia, Japan and the US, aimed at developing cutting‑edge port infrastructure .

Consequences for logistics and exports:

FTAs lower tariff barriers, enabling traders to benefit from preferential access and boost volumes.

Collaboration through Quad can accelerate modern port practices, enhancing competitiveness of Indian maritime logistics.

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5. Supply Chain Digitalisation & AI-Driven Efficiency Gains

Digital transformation has become a core pillar. Government platforms like BharatTradeNet (BTN)—set up in the Union Budget 2025—integrate international trade documentation with customs clearance and finance . Moreover:

IndiaAI highlights the deployment of AI-powered demand forecasting, inventory optimisation and blockchain-enabled visibility .

Over 1 billion API transactions through logistics platforms (like ULIP) signify deepening digital maturity .

How it reshapes trade:

Smoother, transparent documentation reduces delays at ports and borders.

Predictive analytics enhances inventory planning, cutting waste and costs—especially vital for perishable exports.

Enhanced tracking reduces shipment loss and fraud, satisfying global buyers’ standards.

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Why These Trends Matter for India’s Trade

Cost reduction: From infrastructure to digital platforms, these reforms aim to lower the hefty ~14 per cent logistics‑GDP burden. According to projections, achieving ~9 per cent can unlock a US $100 billion export opportunity by 2030 .

Resilience & sustainability: Green warehousing, smart ports and digitalised customs create a more climate‑responsible and disruption‑ready system.

Global competitiveness: Infrastructure, FTAs and AI integration position India as a preferred alternative to China—for sectors like electronics, automotive, pharmaceuticals and agri-processing.

Tier‑2/3 uplift: Policies targeting regional warehouses and industrial parks spread logistics growth beyond metro regions—benefiting MSMEs too.

Inclusive growth: Gender‑responsive land ports and multimodal exchange points support inclusive labour participation.

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Challenges & the Road Ahead

While these trends are promising, India must address several hurdles:

1. Financing and regulation

Despite policy support, large‑scale investments require smooth regulatory frameworks and bankable models to avoid delays.

2. Skill shortage

Digital and AI‑based logistics demand a skilled workforce—training programmes and Industry 4.0 readiness are essential.

3. Association & standards

Harmonising state-level warehousing standards, customs efficiency and local infrastructure remains a challenge.

4. Last‑mile connectivity

Modern terminals need seamless linkages to rail, road and air logistics for full value-chain integration.

5. Ensuring equitable access

Prioritising tier‑2/3 regions and women-led logistics enterprises must remain central as scale-up occurs.

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Final Reflections

India’s logistics and supply chain revolution is now well underway. From green warehousing, infrastructure mega‑projects, digital platforms, AI-led processes, to FTA-fuelled trade routes, the nation is meticulously laying the foundations for sustained trade-led growth.

By tackling challenges in financing, skills and standardisation, India is ripe to reduce logistics costs, enhance resilience and climb the global value‑chain ladder. For exporters, manufacturers and MSMEs, this means faster delivery, better pricing and easier access to global markets—from Europe to the UK, UAE, and beyond.

As the calendar heads into late 2025, these trends provide both momentum and mandate for businesses to rethink supply chain strategies, invest in digital systems, and pair up with green logistics providers—a clear roadmap for future-proofing India’s trade ambitions.

Navigating the Trade War Maze: FTZs, Bonded Warehouses and Tariffs

As global trade tensions intensify, businesses face the pressing challenge of shielding themselves from volatile tariffs—particularly on Chinese imports. In July 2025, companies have ramped up use of Foreign‑Trade Zones (FTZs) and bonded warehouses as strategic refuges to manage duty exposure, improve cash flow and retain flexibility.

What are FTZs and bonded warehouses?

Foreign‑Trade Zones (FTZs) are specially designated areas considered outside the Country's Customs territory. Firms can bring in goods—raw components or finished products—without paying duties until the items leave the zone for domestic consumption. If re-exported, no tariffs are ever due. Moreover, simple operations like storage, mixing, repacking, or assembly are permitted under customs supervision .

Why the sudden surge in popularity?

Amid a recent series of drastic tariff hikes, U.S. duties on Chinese goods ballooned to as high as 145 % in April 2025 under Section 301 tariffs  . Although a 90‑day truce in mid-May reduced tariffs to around 30 %, uncertainty persists  . This unpredictability has led companies to scramble for mechanisms that prevent over‑investing in duties at the worst possible time:

Bonded warehouses allow deferment of duty payments to align with sales, aiding cash flow—although rental rates have soared, in some cases quadrupling due to demand  .

FTZs offer the possibility to "lock in" prevailing tariff rates when goods are admitted, granting protection in case rates surge again after the reprieve ends  .

Reuters reports that U.S. businesses are racing to convert standard warehouses into bonded facilities: over 1,700 such warehouses exist, yet demand has overwhelmed capacity. Conversion typical costs—ranging from thousands to six-figure sums—and approval queues now take months rather than weeks  .

FTZ vs bonded warehouses: a comparison

Feature FTZ Bonded Warehouse

Cash‑flow Duty deferred until goods enter U.S. commerce Duty deferred until withdrawal

Export exemption No duties if re‑exported No duties if re‑exported

Processing allowed Storage, assembly, mixing under CBP license Storage, limited repackaging

Duty treatment Can elect inverted tariff at exit Regular duty at withdrawal

Time limit Indefinite retention allowed  Up to 5 years permitted 

Setup difficulty Lengthy approval, security protocols Also requires CBP approval, but simpler

In practice, FTZs offer deeper flexibility—ideal for firms that handle large volumes, want to manipulate or assemble goods, or anticipate frequent retesting of tariffs. Bonded warehouses, in contrast, are more straightforward to access and useful for simpler storage needs or slower-moving inventory.

Real-world trends in mid‑2025

A sharp pivot by importers towards FTZs has occurred. In May, businesses began shifting away from bonded storage to FTZs as tariff forecasts improved—but uncertainty remained too high  .

City distributions have been set up in FTZs. For instance, the Port of Houston operates FTZ 84—handling US $50 billion of merchandise in 2022 alone—giving firms access to duty shelter and manufacturing perks  .

Importers in sectors such as fashion, electronics and auto parts are investing in U.S.-based bonded and FTZ-enabled logistics, as a way to maintain competitiveness despite high tariffs  .

Navigating in‑bond and short‑term solutions

For those seeking a less permanent solution, bonded Container Freight Station (CFS) entries and in‑bond shipments allow goods to remain under customs control for brief periods (typically around 15 days) without duties—strategic for rerouting, staging, or short‑term deferrals  .

Strategic decision—how to choose?

Complexity, volume, cash‑flow needs, and operational flexibility define the choice:

High-volume importers needing manufacturing or assembly: opt for FTZ.

Smaller-scale, value-heavy goods with slower turnover: bonded warehouse may suffice.

LCL shipments or rerouting scenarios: in‑bond CFS offers a cost-effective stop‑gap.

Both FTZ and bonded strategies defer duties until revenue is generated. But FTZs add possibilities such as inverted tariffs (paying lower duty rates on finished goods), weekly entry consolidation, and even exemptions on waste or scrap. Bonded warehouses, while more limited, require less infrastructure and are simpler to adopt for conventional storage.

The wider picture

With trade policy oscillating, logistics tactical planning matters more than ever. A recent surge in shipments between China and the U.S.—up nearly 300 % in early May—puts pressure on port and warehouse capacity, shifting transport preferences toward rail and short‑haul trucking  . Meanwhile, firms that locked into bonded facilities or FTZs remain resilient against sudden regulatory shift.

Moreover, an unprecedented rush for bonded space—leading to rental costs four times higher than standard storage—signals that tariff strategy has become a cornerstone of supply‑chain planning  .

Final take

In today’s trade‑war era, FTZs and bonded warehouses are no longer niche instruments—they’re essential shields in a volatile customs landscape. Whether your business manufactures, re‑exports, stores high‑value goods or simply buys in bulk, a well‑crafted tariff‑deferral strategy can:

1. Protect margins by delaying duties until the optimal moment

2. Offer adaptability if tariff rates rebound

3. Improve cash‑flow alignment to sales

4. Support manufacturing or product assembly under supervision

As July 2025 progresses, companies face a choice: stay reactive to tariffs—paying upfront duties and risking losses—or adopt forward‑thinking customs strategies. For those in logistics, manufacturing, apparel, electronics or auto parts, FTZs and bonded facilities offer not just compliance but competitive advantage.