Speed Post News Network

New Delhi : The Committee for Development of Avenues for Ship Acquisition, Financing and Leasing from GIFT IFSC in India has submitted its Report to International Financial Services Centres Authority (IFSCA).

The Committee, constituted by IFSCA on June 24, 2021, under the chairpersonship of Vandana Aggarwal with representatives from Government of India, Gujarat Maritime Board, industry and finance experts, and academicians, submitted its Report titled S.A.F.A.L. (Ship Acquisition, Financing and Leasing) to IFSCA on October 28, 2021.

The Committee observed that India, despite having a large coastline, growing domestic market and international seaborne trade, deep-rooted maritime traditions, and skilled seafarers, continues to have a smaller share in international shipping sector, thus becoming a net importer of shipping services especially ship finance, according to a PIB release.

The Committee carried out a 360-degree examination of the existing legal and regulatory regime in IFSC in India for ship acquisition, financing, and leasing, comparing it with those of global top-ranking marine hubs. It developed financial models to gauge the gap in costs, including capital and operating costs and tax costs, of doing this business in IFSC and these hubs. It has identified bottlenecks to the realisation of India’s shipping sector’s growth story.

It held extensive stakeholder consultations towards working out the changes required for seeding a robust Ship Acquisition, Financing And Leasing (SAFAL) regime at India-IFSC. To this end, it also holistically considered the supportive links of ship building, flagging, operating, and repairs and recycling in the shipping value chain. Focus remained on enabling cost-effective and competitive delivery of shipping services on ships owned and leased from India-offshore IFSC which is on par with overseas competitors, according to a PIB release.

It has presented the critical and necessary changes required to bring this greenfield venture to India IFSC. These cover legal and regulatory domains, direct and indirect taxes, ship finance, and ease of doing business drawing upon global best practices. The Report provides useful recommendations for realizing the true transformational potential of India’s shipping industry. It finds that the time is opportune for imparting a brand value to Indian-flagged vessels. This can be done by carving out a share in global cross trades, securing gainful transactions for India’s marketplace, promoting decarbonisation, greening of the blue oceans, and leveraging India-IFSC Maritime for achieving the Maritime India Vision 2030 and beyond.

Essentially, the Committee has found that the concept of IFSC, conceived for financial services, should be naturally extended to SAFAL products and services, including ancillaries. This may entail notifying vessel leasing or operating lease of any equipment as a ‘financial product’ to enable ship leasing entities to set up a unit in IFSC. I