Cabotage refers to shipping along coastal routes between foreign sea ports, and also to the restriction on the operation of vessels between sea ports within a particular country. The Indian Cabotage rules are  contained in Sections 406 and 407 under Part XIV of the Merchant Shipping Act 1958 (the Act). In summary, pursuant to these Sections only Indian flagged vessels or vessels chartered by an Indian citizen or company, operating under a licence granted by the Director General of Shipping (Director General), can carry cargo from one Indian port to another Indian port.

Foreign flagged vessels are permitted to carry cargo only if Indian flagged vessels are not available.
Three distinct types of license may be granted by the Director General:
A general license , A license for the whole or any part of the coasting trade of India; or A license for a specified period or voyage