Cabotage is the transport of goods or passengers between two places in the same country, usually along a coast.
Recently government relaxed cabotage rules to boost transhipment.
This is because at present, Indian ports are not popular transhipment destinations, losing out to Colombo, Dubai or Singapore. Also this would ensure, as far as India is concerned, with her long coastline, increasing the use of coastal waterways can considerably reduce the pressure on roads / highways created by freight movements.
Cabotage is a sovereign right of the country. Cabotage restrictions are applicable in most countries to protect the domestic shipping industry from foreign competition as well as for the purpose of national security. China and USA are known to impose absolute cabotage restrictions.
However, the contrary view is that if coastal ships are less in number, cabotage restrictions do not do any good for the nation. For instance, the growth of coastal fleet in India is not viewed as impressive. When there are not enough domestic coastal vessels, imposing cabotage, discourages coastal transport due to the procedural lags.
Note: Transhipment is the movement of goods and containers to an intermediate destination, usually to be transferred to another place on another mode of transport.