In a significant policy shift aimed at strengthening India’s maritime financing ecosystem, the Union government has decided to ease licensing requirements for Indian entities chartering foreign-flag vessels exclusively for overseas operations that do not involve Indian ports.
A formal notification is expected shortly from the Ministry of Ports, Shipping and Waterways, according to a senior government official.
Key Relief for Global Operations
Under existing rules, Indian entities are required to obtain a licence from the Directorate General of Shipping (recently referred to administratively as the Directorate General of Maritime Administration) when chartering foreign-flag ships—irrespective of whether the vessels operate within or outside Indian waters.
The upcoming relaxation will remove this requirement for ships deployed purely in international trade between foreign ports, marking a major relief for Indian commodity traders and shipping companies engaged in global cross-trades.
“We are relaxing the licensing requirement if the foreign-flag ship hired by an Indian entity does not call at Indian ports,” the official confirmed.
Push from GIFT City
The move follows sustained representations from the International Financial Services Centres Authority (IFSCA), which has been advocating regulatory easing to attract ship leasing and maritime financing firms to Gujarat International Finance Tec-City.
Industry stakeholders have argued that the existing framework under the Coastal Shipping Act 2025 creates unnecessary hurdles for Indian firms competing in global shipping markets.
Industry Concerns Over “Excessive Control”
The current law mandates that Indian citizens, companies, LLPs, NRIs, and OCIs must secure a licence to charter foreign vessels for:
- Coastal trade
- Import/export cargo movements
- Even transport between two foreign ports
This provision has drawn criticism from commodity traders and chartering professionals, who say it complicates international deals and reduces competitiveness.
“If an Indian entity charters a vessel to move crude from West Asia to the United States, why should Indian authorities be involved when neither port nor flag jurisdiction is Indian?” questioned an industry executive.
Another chartering veteran warned that the rule could act as a “noose around our neck,” especially in time-sensitive tanker markets where contracts must be concluded within tight deadlines.
Procedural Bottlenecks
Stakeholders have also highlighted procedural delays linked to approvals from the Indian National Shipowners’ Association, which are often required before regulatory clearance is granted.
These requirements, they say, can disrupt commercial negotiations where “subjects” (final contractual conditions) must be lifted quickly for agreements to become binding.
Government’s Balancing Act
Despite the relaxation, the government has defended the broader licensing framework, citing accountability and safety concerns.
Officials note that even in overseas operations, Indian charterers remain linked to vessels in the event of incidents that may come under global scrutiny, including at the International Maritime Organization.
“Before granting licences, we ensure vessels comply with international safety conventions and carry valid certifications,” the official said, underlining the need for regulatory oversight.
Policy Intent
The licensing provisions stem from the separation of coastal shipping regulations from the Merchant Shipping Act 1958 into a dedicated framework under the Coastal Shipping Act, intended to enable more focused policymaking.
With the latest relaxation, the government appears to be recalibrating its approach—balancing regulatory control with the need to position India, and particularly GIFT City, as a competitive global maritime hub.
The proposed exemption is expected to ease compliance burdens, accelerate deal-making in international chartering, and enhance India’s attractiveness as a base for global shipping and leasing operations—while retaining oversight where national interests are directly involved.
