Merchant Shipping Act: Govt to replace imprisonment provisions with penal fines

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Merchant Shipping Act: The Union government has proposed amendments to two existing laws to decriminalise some offences, replacing the provision of imprisonment with small monetary penalties. This is in line with the efforts of the NDA government led by Prime Minister Narendra Modi to improve ease of doing business in the country. These laws are Warehousing Development and Regulation Act (WDRA) and Merchant Shipping Act. Under the changes proposed in the Merchant Shipping Act, the provision of imprisonment will be deleted while for the case of the former, the penalties have been increased in monetary terms while jail term will be done away with.

The Merchant Shipping Act, 1958 is a comprehensive legislation dealing with merchant shipping in India. The statute had been brought in to ensure the efficient maintenance of an Indian mercantile marine ecosystem. This also served to best suit the national interests. Presently, the Act contains 560 provisions as a result of various amendments made to the law from time to time.

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As the merchant shipping sector has undergone various changes in recent years, the government has at times made interventions to meet the new challenges faced by the industry. This also meant updating old provisions, promoting the ease of doing business, and incorporating India’s obligations under various international conventions. Previously, the Merchant Shipping Bill, 2020 was promulgated to replace the Merchant Shipping Act, 1958 and the Coasting Vessels Act, 1838.

Previous changes in Merchant Shipping Act

With the 2020 change, the government had ambitious plans in mind. This meant reducing compliance burden, increasing tonnage under the Indian flag, enhancing the rights and privileges of seafarers, ensuring the safety and security of vessels, safety of life at sea, and preventing marine pollution.

The now draft Merchant Shipping (Amendment) Bill, 2022 proposes allowing non-resident Indian and Overseas Citizens of India to own Indian ships.

The move is in line with the government’s agenda of doing away with archaic and redundant laws and provisions that are now posing as hindrance in helping businesses bloom. In fact, this clean up drive was one of the poll promises of the Modi government and a core focus area. At that time, the prime minister had said that for passing every law, the government, if elected, will also clean the statute book by removing 10 obsolete laws.

In fact, decriminalisation of various minor offences has been a major goal of the NDA government which has also directed several ministries to do away with the provision of imprisonment for various offences. The move is expected to increase ease of doing business in India as often tighter rules are a big disincentive for companies and employees to dip their toes in varied businesses.

Ease of doing business in India

India drastically improved on its Ease of Doing Business ranking after 2014 and was ranked 63rd in 2020 from 142nd in 2015 under the World Bank’s Doing Business rankings. However, the annual report was discontinued last year after irregularities were unearthed in the ranking process. However, the Indian government continues to assess states and UTs on the basis of implementation of various reform parameters for improvement of the business environment. This year in June, Andhra Pradesh, Gujarat, Haryana, Karnataka, Punjab, Tamil Nadu and Telangana were declared the top achievers.

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Efforts to support small businesses

Recently, minister of state for commerce and industry Som Parkash said that more than 33,000 compliances have been simplified, rationalised, digitised or decriminalised by central ministries/ departments and states/union territories combined under the agenda of promoting ease of doing business in India. The same was in response to a question if the government is aware that smaller industries are compelled to shut down due to tedious compliances.

Entrepreneurs in India still have a long way to go before enjoying free business environment as there are 26,134 clauses existing as penalties for non-compliance with business laws, according to a report ‘Jailed For Doing Business’, prepared by TeamLease RegTech and Delhi-based independent think tank Observer Research Foundation in February this year. According to the same report, a typical MSME with more than 150 employees, faces 500-900 compliances which translates into an expense of Rs 12-18 lakh in a single year.

India’s action plan to promote Ease of Doing Business includes 301 reform points covering 15 business regulatory areas such as access to information, single window system, labour, environment, land administration, transfer of land and property, utility permits and others, according to the commerce ministry.