Explanation:

1st option is correct.
Cabotage means reserving coastal trade for national flag vessels; in other words, it refers to the practice of imposing restrictions for movement of domestic cargo by foreign flag vessels.
Cabotage is applied in the coastal trade or the internal trade from one port to another in India, which is generally carried out by ships of lower draft/depth. Coastal movement require the use of smaller sized ships due to draft (depth), waterway width and navigational restrictions, as well as the availability of appropriate loading and handling facility at the port.