Date: 2023-10-06Category: DGS CircularState: Union GovernmentCountry: India
ADDENDUM No. 1 TO THE DGS CIRCULAR NO. 02 of 2021 dated 05.10.2023 reg Guidelines for exercise of Right of First Refusal - grant of license to foreign flag vessels for your information
**Executive Summary**
This document is Addendum No. 1 to DGS Circular No. 02 of 2021 from the Directorate General of Shipping, dated October 5, 2023. It amends the guidelines for the exercise of the Right of First Refusal (RoFR) concerning the grant of licenses to foreign flag vessels, incorporating notifications related to the "Promotion of Make in India initiative." The addendum clarifies the order of RoFR grant and introduces conditions under which certain vessels are deemed as Indian built. This circular takes effect from the date of issuance.
**Key Points / Main Content**
* **Amendment of DGS Circular No. 02 of 2021:** The addendum amends parts of the original circular concerning the Right of First Refusal (RoFR).
* **Order of Grant of RoFR (Para 21.3.4):** The order for granting RoFR is clarified as follows:
* Indian built, Indian flagged, and Indian owned.
* Indian built, Indian flagged, and Indian IFSCA owned.
* Foreign built, Indian flagged, and Indian owned.
* Foreign built, Indian flagged, and Indian IFSCA owned.
* Indian built, foreign flagged, and foreign owned.
* **Deemed Indian Built Vessels:**
* All vessels flying the Indian flag (registered in India) up to the date of the new circular's issuance are deemed Indian built and fall under category (a).
* Foreign flagged vessels permitted by DG Shipping for chartering by an Indian citizen/company/society building a ship in an Indian shipyard for Indian flag registration, as a temporary substitute, are deemed to fall under category (a) if:
* 25% of the contract money has been paid to the Indian shipyard.
* 50% of the hull fabrication has been completed, certified by a Recognized Organization.
* **Licensing Duration:** The duration of licenses for such chartered vessels is limited to the period of building the ship, as specified in the shipbuilding contract.
* **Effective Date:** The addendum and licensing conditions are effective from the date of its issuance.
**Impact Analysis**
**Stakeholders: All stakeholders/All Charterers/Shippers/All Indian Shipping Companies**
* **Impact:** This addendum clarifies the conditions under which vessels are granted RoFR, potentially affecting the prioritization of Indian built and flagged vessels in chartering processes.
* **Action Required:** Review the amended guidelines to understand the updated order of RoFR grant and ensure compliance with the new conditions for deemed Indian built vessels.
**Stakeholders: INSA/ICSSA/FOSMA/MASSA/Shipyards**
* **Impact:** Shipyards may see an increase in demand for Indian-built vessels to qualify for the higher RoFR preference.
* **Action Required:** Understand the impact of the addendum on shipbuilding contracts and be prepared to provide necessary certifications (e.g., hull fabrication completion).
**Stakeholders: Indian Private Ports and Terminals Association**
* **Impact:** Potential implications for vessel traffic and port operations depending on the impact of the amended RoFR guidelines on chartering decisions.
* **Action Required:** Assess the potential changes in vessel operations due to the addendum.
**Stakeholders: Shipyard Association of India**
* **Impact:** The addendum could stimulate the Indian shipbuilding industry through RoFR incentives.
* **Action Required:** Communicate the details of the addendum to member shipyards and prepare for potential increases in demand.
Key Entities Referenced
DGS Circular No. 02 of 2021 (Shipping Development): The primary circular being amended by this addendum, concerning guidelines for exercise of right of first refusal for foreign flag vessels.
Ministry of Ports, Shipping and Waterways: The government ministry responsible for the policy area, issuing notifications incorporated into the addendum.
Merchant Shipping Act, 1958: The act which provides the legal basis for the Directorate General of Shipping's powers, referenced in relation to section 406 and 407.
International Financial Services Centres (IFSC): Refers to the special economic zones where international financial services are conducted and which are considered under the shipping operations.
International Financial Services Centres Authority Act, 2019: The act establishing the authority that regulates the IFSCs, where permitted shipping operations are conducted.
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File No. l6-180111912023-SD DGS (C.No 22004) Date: 05.10.2023
ADDENDUM No. I TO THE DGS CIRCULAR NO. 02 OF 2021
(SHIPPING DEVELOPMENT)
The DIRECTORATE GENERAL OF SHIPPING,
RECALLING the DGS Circular No. 02 of 2021 (Shipping Development) on"Guideline.s.fttr
exercise o/'right offirst Refusal -Grant tt'Licence tufitreigy.flagvessef', dated I4.01 .2021.
RECALLING ALSO the Notification (No. SY-l 30171412017-SBR) of the Ministry of Ports
Shipping & Waterways', dated 23.10.2020 on"Promotion cl Make in lrulia initiative- RoI;R
(Right of l'irst Re.fusal) for Indian built and Indian.flagged ,ships through amendments to
Guidelines.for chartering of vessel,s done through tender process,for all types of requirentents"
HAVING CONSIDERED the developments with regards to the permitted shipping operations
(such as sale and lease back, purchase, chartering, operations etc.) under The International
Financial Services Centres (IFSC), which is the constituted under the International Financial
Services Centres Authority Act, 2019
And also INCORPORATING the provisions of the Notification (No. SY-l 3017/4/2017-SBR)
from Ministry of Ports, Shipping & Waterways, dated 20.09.2023 on "Promotion of Make in
India initiative- RoFR for Indian built and Indian flagged ships through amendments to
Guidelines for chartering of vessels done through tender process for all types of requirements.
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*ttrra No.: +91-22-2575 2o4ol1t2t3 frffi/ra^., +s1-22-2575zoag}s t-ttlemait: dgship-dgs@ni".i, tdrfamv"bsite: wwwdgshipping.gov.inBased on the above and in exercise of powers
conferred
Merchant Shipping Act' under Section 406 and407 of the
I 958, the Direcror
Generar of shipping, AMEI*D'
Circular parts of the DGS
No. 02 ot 202l as set out in thisA elclenchrn.
l'
"para 2 t'3'4' r"or'/itt'ther
crctriLv the order of g.cutt t1/'ttol,tt
v,ottrrl be a,s./itilout.s;
_
(a) lndian htih, Inclian.flaggetl
cnul lnclior.tyned,
(h) lnctian btrilt, lndian.flagge,
c,rct lncliurt t|;SCA
rn,netl.
(c) l;orcip
huilt, Jndiart.flagged
anct hrclian
r;^r,necl,
(d) Fot"eign hrilt,
ltrclicut,flaggecl
onrl Incliatr lt,.scA
,vyned,
(e) I r tdi a n b u i I t, ./bre i gtr .flagge d a trtl.fore i gn ov, t rc cl
provided
that:
l' All
vessels flying the f)ag of India (i.e. registered in India) up to rhe date of issue
(mid night of the date) of new circular by the Director
Generar of Shipping, sha,
be
deemed to be Indian buirt vessers and wi, tb, in category (a) above.
2
The Foreign flagged vessels permitted
by the DG Shipping, under section 406 of the
MS Act' 1958' for chartering by anlndian citizen/companylsociety,
who is buirding
a
ship in an Indian shipyard for registration
under Indian flag, as a temporary substitute
for the lndian Ship under construction,
meeting the foilowing two condition, sha,
be
deemed to fhll under category
[a] above:
a) The 25yo of the contract rnoney rras been paid to Indian shipyard
b) The 50vo of the hu, fhbrication
has been compreted, as may be certified by
a
Recognized
Organization
Page 2 of 4The duration of lice.ces to such c,hartered vesser shail be limited to period of building
of the Ship, as rnenrioned in the shipbuilding contract.,,
2'
This above-mentioned Licencing Condition & Circular will come into force w.e.f the
date of its issuance.
3'
This Circular is issued with the Approval of the Director General of Shipping &
Additional Secretary to the Govt. of India
(Shitesh Ranjan)
Ship Surveyor *cum-Deputy Director General of Shipping ITech./Shipping Development]
&,
1 All
stakeholders/All Charterers/Shippers/All Indian Shipping Companies, through the
official website of the DGS, Gol.
2 INSA/ICSSA/FOSMA/MAS
SA/Shipyards
3. Indian Private Ports and Terminals Association.
4. Shipyard Association of India.
5. E-gov cell of the Directorate General of Shipping
I
PS to Hon'ble Minister of State (Indeperrdent Charge) for ports, Shipping, and Waterways
Gol
Page 3 of 42
Secretary to the Gofi of India, Minrstry of Ports, shipping, and waterways, Transporl
Bhawan, l, Sansad Marg. New Delhi_ll000l
3. CEO, NlTlAayog, New Delhi.
4
Secretary Department of Defence, South Block, Ministry of Defence, New Derhi.
5
Secretary Department of Defence production, Ministry of Defence, South Block, New
Delhi- I l00l I
6'
Secretary Department of Industrial policy & promotion, Udyog Bhawan, New Delhi,
lr00ll.
7. secretary Ministry of petroleum and Natural Gas, A_wing, Shastri Bhawan, Dr. Rajendra
Prasad Road, New Delhi- l l001l.
8. Secretary Ministry of Chemicals and Fertilizers, A-Wng Shastri Bhawan, Dr. Rajendra
Prasad Road, New Delhi- I l00l I
.
9
Secretary Ministry of Steel, Udyog Bhavvan, Dr. Maulan a AzadRoad, New Delhi, I I 001 I
l0
Secretary Ministry of Ho*re Affairs, N.r-th Block, central Secretariat, New Delhi, I 10001.
Page 4 of 4