Ships built and registered in India and owned by Indian entities will get top preference for carrying cargo or providing other services such as dredging and offshore oil exploration support activities to State-run entities, according to the new norms on Right of First Refusal (RoFR) announced by the Shipping Ministry on Thursday.
The second priority will be accorded to foreign built, Indian flagged and Indian owned ships followed by Indian built, foreign flagged and foreign owned vessels.
All Indian flag vessels up to the date of issue of the new circular on RoFR by the Director General of Shipping shall be deemed to be Indian built vessels and will get first priority.
The duration of licence to such chartered foreign flag vessel shall be limited to the period of building of the ship in India, as specified in the shipbuilding contract.
The revision of RoFR licensing conditions is a giant step towards ‘Atmanirbhar’ and promote demand for ships built in India, said Shipping Minister Mansukh Mandaviya.
The new rules on RoFR will be enforced when State-run firms and government departments float global tenders to hire ships where the transportation contract value is more than ₹200 crore. As per the revised Make in India policy, RoFR is not applicable for ship hiring contracts with value below ₹200 crore; these contracts can only be given to Indian shipping companies.
Under the RoFR rules that have been followed for many years, local fleet owners got a right to match the lowest rate offered by a foreign flag ship in tenders issued by State-run firms for hiring ships under the chartering guidelines framed by the Director General of Shipping. If Indian shipping companies declined, then only the foreign flag ship, that had quoted the lowest rate, was allowed to carry the cargo or provide services. The RoFR was enforced according to a pecking order of priority.
The Shipping Ministry said that the re-designed RoFR seeks to further incentivise shipbuilding by providing additional market access and business support to ships built in India.
Local shipbuilders are already entitled to a subsidy under a ten-year shipbuilding financial assistance scheme that began in 2016. The government has disbursed ₹61.05 crore till date under this scheme.
“The revised RoFR policy will promote ‘Make in India’ initiatives through self-reliance and will give a strategic boost to the domestic ship building industry, contributing towards long-term economic growth of India”, Mandaviya added.