Karan Adani Urges Kerala CM to Press Centre for Cabotage Relief to Safeguard Vizhinjam Port Growth

By Admin

16 Feb, 2026

Strategic Push to Protect Vizhinjam’s Momentum

In a significant development for India’s maritime and logistics sector, Karan Adani, Managing Director of Adani Ports and Special Economic Zone Ltd (APSEZ), has urged Pinarayi Vijayan to intervene with the Centre and ensure continued relaxation of cabotage rules.

Adani has warned that the rollback of cabotage relaxations could adversely impact the growth trajectory of the Vizhinjam International Deepwater Multipurpose Seaport, one of India’s most strategically positioned transshipment hubs.

What Has Changed in Cabotage Policy?

On January 21, the Ministry of Ports, Shipping and Waterways scrapped three general orders issued in 2018. These orders had allowed foreign-flag vessels to:

• Carry EXIM containers meant for transshipment
  
  

• Reposition empty containers
  
  

• Transport select commodities on coastal routes
  
  

• Operate without obtaining a licence from the Directorate General of Shipping
  
  

The withdrawal will take effect three months from the order date, allowing stakeholders time to transition.

Under India’s cabotage laws, coastal trade is reserved for Indian-flag vessels. Foreign ships can operate only if Indian vessels are unavailable.

Legal Basis: Concession Agreement and Merchant Shipping Act

Karan Adani has invoked Article 6 of the 2015 concession agreement signed between Adani Vizhinjam Port Pvt Ltd (a wholly owned APSEZ subsidiary) and the Kerala government.

He has requested the state to provide “reasonable support and assistance” in securing an exemption under Section 407(3) of the Merchant Shipping Act, 1958. This provision empowers the Centre to grant exemptions from cabotage restrictions.

A Kerala government official clarified that when the concession agreement was signed in August 2015, there was no cabotage relaxation. While a clause existed to assist the concessionaire on a best-effort basis, it was not invoked earlier because cabotage relaxation was already in place when Vizhinjam commenced operations in December 2024.

Following Adani’s letter, Chief Minister Vijayan has written to the Centre highlighting the strategic importance of continued cabotage relaxation for Vizhinjam’s sustained growth.

Why Vizhinjam Is at Risk

Since beginning commercial operations in December 2024, Vizhinjam has demonstrated exceptional performance:

• Handled 1.575 million TEUs
  
  

• Crossed the one-million TEU milestone faster than any new Indian port
  
  

• Recorded 741 vessel calls
  
  

• Over 70 ultra-large container ships (ULCVs) with ~24,000 TEU capacity
  
  

More than 95% of the cargo handled has been carried by vessels operated by Mediterranean Shipping Company (MSC), the world’s largest container shipping line.

Industry sources caution that if cabotage restrictions are reinstated, MSC could shift its transshipment operations from Vizhinjam to Colombo, benefiting competing regional hubs such as Colombo.

Such a move could significantly reduce container volumes at Vizhinjam, undermining its emerging position as a global transshipment hub.

The Policy Rationale Behind the Rollback

The 2018 cabotage relaxation was introduced to:

• Reduce Indian cargo transshipment through foreign ports
  
  

• Lower freight costs
  
  

• Improve container availability
  
  

• Build a competitive logistics ecosystem
  
  

However, after a policy review and stakeholder consultations, the Ministry concluded that:

• Transshipment through foreign ports had not declined significantly
  
  

• Freight costs did not reduce meaningfully
  
  

• Growth in Indian feeder capacity and container fleet did not materialise
  
  

• Indian trade remains heavily dependent on foreign-flag vessels
  
  

The government believes this dependency exposes exporters to external risks and limits foreign exchange retention.

The rollback aligns with broader efforts to promote Indian shipping, including the proposed Bharat Container Shipping Line. Strengthening Indian shipping tonnage and enabling seamless coastal and international cargo movement are viewed as critical to achieving India’s ambitious $1 trillion goods export target by 2030.

A Strategic Crossroads for India’s Maritime Future

The issue presents a classic policy dilemma:

On one side, protecting Indian shipping interests and building domestic capacity.
On the other, ensuring that emerging hubs like Vizhinjam remain globally competitive.

For Kerala, Vizhinjam represents a transformational infrastructure asset capable of reshaping the state’s economic landscape. For India, it is a strategic gateway aimed at capturing transshipment volumes that traditionally flow to foreign ports like Colombo.

Whether the Centre grants an exemption under Section 407(3) could determine whether Vizhinjam consolidates its early success or faces operational headwinds at a crucial growth stage.

As discussions continue between the state and the Centre, the outcome will likely shape not just the future of Vizhinjam but the broader trajectory of India’s maritime logistics ecosystem.