**Executive Summary**
This notification, issued by the Government of India's Ministry of Shipping on October 23, 2020, promotes the "Make in India" initiative by amending guidelines for chartering vessels through a tender process, specifically concerning the Right of First Refusal (RoFR) for Indian-built and Indian-flagged ships. It withdraws previous Notifications and circulars on the matter and outlines revised licensing conditions to incentivize domestic shipbuilding. The notification comes into force from the date of issue, with the Director General of Shipping tasked to issue fresh circulars to implement the revised conditions.
**Key Points / Main Content**
* **Objective:** To encourage and promote manufacturing and production of goods in India under the 'Make in India' initiative.
* **RoFR Exercise:** In any vessel charter undertaken through a tender process, the RoFR will be exercised in the following order:
* Indian-built, Indian-flagged, and Indian-owned vessels.
* Foreign-built, Indian-flagged, and Indian-owned vessels.
* Indian-built, foreign-flagged, and Indian-owned vessels.
* **Definition of Indian-Built Vessels:**
* Vessels flying the Indian flag up to the issue date of the new circular will be deemed Indian-built.
* Foreign-flagged vessels chartered by an Indian citizen/company/society constructing a ship in an Indian shipyard can be deemed under category (i), provided:
* 25% of contract money has been paid to the Indian shipyard.
* 50% of hull fabrication has been completed, certified by a Recognized Organization.
* The license duration is limited to the shipbuilding contract period.
* **Purchase Preference:** RoFR is applicable to in-charter of foreign flagged vessel within a 20% margin of purchase preference (price band).
* **Implementation:** The RoFR licensing conditions come into force from the date of issue of this order. Necessary amendments to the relevant shipping development circulars for implementing the revised licensing conditions will be issued by Directorate General of Shipping.
* **Grievance Redressal:** Any grievances arising from the implementation of these guidelines shall be referred to Director General of Shipping.
* **Supersession:** This notification supersedes Ministry's Notification No. 2 dated 13.02.2019 and circular of DG(Shipping) dated 22.03.2019.
**Impact Analysis**
**Stakeholder: Directorate General of Shipping (DG Shipping)**
* **Impact:** Responsible for implementing the revised licensing conditions and issuing fresh circulars/guidelines in supersession of earlier ones.
* **Action Required:** Issue fresh circulars and provide wide publicity for revised conditions.
**Stakeholder: Shipyard Association of India, Indian National Shipowners Association, and Indian Shipyards.**
* **Impact:** Benefit from increased demand for Indian-built and flagged vessels through RoFR and purchase preference policies.
* **Action Required:** Be aware of the new requirements, and ensure that new projects meet eligibility.
**Stakeholder: Indian Shipping Companies and Charterers**
* **Impact:** Must comply with the new RoFR guidelines when chartering vessels, potentially affecting chartering costs and vessel availability.
* **Action Required:** Understand and comply with the new RoFR guidelines when chartering vessels.
**Stakeholder: Other Ministries and Departments**
* **Impact:** Aware of the policy to encourage shipbuilding in India.
* **Action Required:** No direct action specified, but information is forwarded to coordinate government efforts.
Key Entities Referenced
Right of First Refusal (RoFR): Mechanism giving priority to Indian built and flagged vessels in chartering through tender processes.
Ministry of Shipping: The issuing authority for the policy promoting the Make in India initiative in the shipping sector.
Merchant Shipping Act, 1958: Existing legislation under which the Right of First Refusal (RoFR) is available.
Make in India: Government of India initiative to encourage and promote manufacture and production of goods in India.
New Delhi: Location where this notification was issued.
No. SY-1 301 7/4/201 7-SBR
Government of lndia
Ministry of Shipping
(SBR Section)
Transport Bhawan, Parliament Street
New Delhi - 1100(ll
Dated) lpctober, 20110
NOTIFICATION
Subject: Promotion of Make in lndia initiative- RoFR for lndian built and lndian
flagged ships through amendments to Guidelines for chartering of vessels done
through tender process for all types of requirements.
Whereas, it is the express policy of the Government of lndia to encourage and
promote manufacture and productron of goods in lndia under 'Make in lndia', with a
view to enhance income and employment. To give effect to this policy, the Department
of lndustrial Policy and Promotion (DIPP) has issued Public Procurement and 'Make in
lndia' orders dated 15.06 2017 ,28 05.2018 and 04.06 2020.
2.
whereas, Government of India has taken several steps to promote shipbuild ng
in lndia especially by providing long term subsidy for ship building under the
shipbuilding financial assistance policy (20'16-2026). Budgetary provision of Rs. 150
crore has been earmarked by this Ministry in 2O2O-21 for providing financial assistance
to all lndian Shipyards, excluding Defence Shipyards.
3. whereas, Government of lndia intends to further incentivise shipbuilding by
providing additional market access and business support to ships built in lndia.
4. whereas, it is felt that demand for the ships built in lndia can be promoted if priority
in chartering of vessels is given to vessels built in lndia, flagged in lndia and owned by
lndians.
5. whereas, under the existing licensing conditions under section 406 and 407 of
Merchant shipping Act, 1958, the Right of First Refusal (RoFR) is available to lndian
flag vessels whenever charter of a vessel is undertaken through a tender process.
6. whereas, a need has also been felt to review the licensing conditions keepingr in
view, (i) the Government of lndia's policy of promoting the lilake in India initiaf ve,
(ii)the Public Procurement and Make in tndia orders daGd 1s.6.2011 and 28.05.2018
and 04.06 2020 issued by Dlpp. (iii) the need to give a long term strategic boost to the
domestic shipbuilding and shipping industries, livj the need- to the domestic
shipping industry to support the domestic shipbuirding indust" rn y,c o ar nr drg j-v") the neec to
develop self- reliance and a strong synergy among theie vital industries ior the ove rall
long term development and economic growth of the counlry.
7 . This Ministry's Notification no z of 'Make in lndia' of even number dated 13.02.21119
was withdrawn vide this Ministry's Notification of even number daled 20.o7.2o2o.The
glculaq 9f DG(Shipping) dated 22.03.20.1g has atso been withdrawn by DG(S) on
07.08.2020 consultations have been hetd by DG(S) with shipyard Associaiion oi tn,:i",
lndian National shipowners Association and after reaching consensus now it has been
Contd. Page 2/--2-
decided with the approval of the competent authority that in any kind of charter of a
vessel which is undertaken through a tender process, the Right of First Refusal (RoFR)
would be exercised in the following manner.
(i)
lndian built, lndian flagged and lndian owned.
(ii)
Foreign built, lndian flagged and lndian owned.
(iii)
lndian built, foreign flagged and foreign owned.
Provided that:
(A) All vessels flying the flag of lndia (i.e registered in lndia) up to the date of issue of
new circular by the Director General of Shipping, shall be deemed to be lndian built
vessels and will fall in category (i) above and
(B) The foreign flagged vessels permitted by DG(Shipping) under Section 406 of the
Merchant Shipping Act, 1958 for charterrng by an lndian citizen/company/society, who
is building a ship in an lndian shipyard for registratron under the lndian flag, as a
temporary substitute for the lndian ship under construction, meeting the following two
conditions shall be deemed to fall under Category (i) above:
(a\ 25o/o of the contract money has been paid to the lndian shipyard.
(b) 50o/o of the hull fabrication has been completed, as certified by a Recognized
Organization.
The duration of licence to such chartered vessel shall be limited to the period of
building of the ship, as mentioned in the ship building contract.
8.
Further, RoFR shall be applicable to all inquiries for in-charter of foreign flagged
vessel within a 20o/o maryin of purchase preference (price band) i.e. the maximum
extent to which the price quoted by an lndian Company may be above the L1 for the
purpose of purchase preference.
9. The above mentioned RoFR licensing conditions shall come into force from the
date of issue of this order. Necessary amendments to the relevant shipping
development circulars for implementing the revised licensing conditions shall be issued
by Directorate General of Shipping The revised licensing conditions may be given
wide publicity.
10. Any grievance arising out of implementation of these guidelines shall be referred to
Director General of Shipping
11. This issues with the approval of Hon'ble Minister of State (lndependent C rge) for
Shipping.
(Dashrath
Director
Tel No.011-23321672
Email : prasad.dashrath@gov.in
To,
Director General of Shipping, Mumbai - with a request to issue fresh
circulars/g u idelines in supersession of earlier circulars/guidelines currently in force on
the subject matter.Copy foruvarded for information to the:
1. Additional PS to MoS (lndependent Charge) for Shipping
2. CEO, NlTl Aayog
3. Secretary Department of Defence, South Block, Ministry of Defence, New Delhi
4. Secretary, Department of Defence Production, Ministry of Defence South Block,
New Delhi- 110011
5. Secretary, Department of lndustrial Policy & Promotion, Udyog Bhawan, New Delhi-
1 1001 '1
6. Secretary, Ministry of Petroleum and Natural Gas, A-Wing, Shastri Bhawan, t)r.
7Ra jendra Prasad Road, New Delhi- 1 1001 1
Secretary, Ministry of Chemicals and Fertilizers, A-Wing Shastri Bhawan, t)r.
Rajendra Prasad Road, New Delhi-l 10011
8. Secretary, Ministry of Steel, Udyog Bhawan, Dr. Maulala Azad Road, New Delhi,
.l
1001
1
9. Secretary, Ministry of Home Affairs, North Block, Central Secretariat, New Delhi-
.1 10001
10. All stakeholders/ /Ail charters/shippers/Ail rndian shipping companies
11. INSA/Shipyards Association of lndia/CSL/ISBA/ICSStuFOSMA/MASSA, Mumbai
Copy also to
PS to Secretary (Shipping) /pS to AS(S) /pS to JS(S)