Public comments on the Consultation paper on proposed notification to enable operating lease, including any hybrid of operating and financial lease of Oil Field Equipment in IFSC

Public comments on the Consultation paper on proposed notification to enable operating lease, including any hybrid of operating and financial lease of Oil Field Equipment in IFSC S. No. Section no. of the draft Comments/ suggestion/ Detailed rationale Notification suggested modification Text of the Section 1. First paragraph of the Draft To mention products along with equipment It is suggested to use the term ‘product or Notification equipment’ instead of ‘equipment’ for clarity, as the It is hereby suggested to mention – “the term ‘equipment’ has a narrower scope compared Authority hereby specifies the following to the items mentioned in the List annexed to the In exercise of the powers conferred products or equipment” Table provided in GST Notification No. 3/2017- by section 12 of the International Central Tax (Rate), dated 28th June 2017 as the list Financial Services Centres Authority also contains products/ goods specifically listed Act, 2019 (50 of 2019) therein. the Authority hereby specifies the following equipment Additionally, the inclusion of the term ‘product or equipment’ aligns with the provisions outlined in Notification S.O. 5199 (E) dated 14th December 2021, issued by the Ministry of Finance (Department of Economic Affairs) which is referred in the draft Notification. 2 Pt. i of the Draft Notification (i) To rephrase the words “that will be Upstream Oil & Gas Industry1 has been claiming utilised in the” with the words “in benefit of this conditional notification for a quite The set of goods mentioned in the connection with” long time (including similar benefit under pre-GST list annexed to the table specified in regime as well). In terms of existing practice, as the GST notification no. It is hereby suggested to mention – long as the equipment is used for specified 3/2017-Central Tax (Rate) dt. 28-06- petroleum or coal bed methane operations, the 2017 that will be utilised in the (ii) The set of goods mentioned in the location of the same does not matter. Use of the oilfield wherein, the expression list annexed to the table specified term ‘Oilfield’ may, on the other hand, would restrict ‘Oilfield’ shall be as defined in the GST notification no. 1 Upstream refers to the initial phases of oil and gas production, involving exploration, drilling, and extraction of crude oil and natural gas. 1S. No. Section no. of the draft Comments/ suggestion/ Detailed rationale Notification suggested modification Text of the Section in the Oilfields (Regulation and 3/2017-Central Tax (Rate) dt. 28-06-2017 in in terms of geographical/ physical location where Development) Act, 1948. connection with oilfield including the such equipment is required to be used. Petroleum operations or Coal bed methane operations as outlined in the said GST Further, the term “in connection with” is a broader notification wherein, the expression ‘Oilfield’ term to cover any goods/ services in relation to shall be as defined oilfield as compared to the phrase used in the draft in the Oilfields (Regulation and Development) notification “that will be utilised in the oilfield” Act, 1948. Thus, in order to cover all the goods as per GST Notification, it is advisable to rephrase the words “that will be utilised in the” with the words “in connection with”. 3 Pt. i of the Draft Notification To rephrase the underlined words as under - It is suggested to use the term ‘product or equipment’ instead of ‘equipment’ for clarity, as the The set of goods/ products/ equipment term ‘equipment’ has a narrower scope compared The set of goods mentioned in the mentioned in the list annexed to the table to the items mentioned in the List annexed to the list annexed to the table specified in specified in the GST notification no. Table provided in GST Notification No. 3/2017- the GST notification no. 3/2017-Central Tax (Rate) dt. 28-06-2017 (as Central Tax (Rate), dated 28th June 2017 as the list 3/2017-Central Tax (Rate) dt. 28-06- on introduced date) that will be used also contains products/ goods specifically listed 2017 that will be utilised in the directly or indirectly in relation to all therein. oilfield wherein, the expression activities including incidental activities or ‘Oilfield’ shall be as defined operations or to provide support services Further, it is relevant to note that sometimes it takes in the Oilfields (Regulation and or facilities in connection with prospecting time for equipment/ product to be used in oilfield Development) Act, 1948. for or extraction or drilling or mining or region for instance on account of monsoon, etc. production of mineral oils or gas from an Hence, the word utilised can be seen in restrictive oilfield wherein, the expression ‘Oilfield’ shall nature. Thus, the phrase ‘directly or indirectly’ can be as defined be considered. Accordingly, as per para 4 of public in the Oilfields (Regulation and Development) consultation paper where oilfield equipment has Act, 1948. been referred, the same language can be adopted in the notification as well. 2S. No. Section no. of the draft Comments/ suggestion/ Detailed rationale Notification suggested modification Text of the Section 4 Pt. i of the Draft Notification The definition of the term Oilfield is suggested The government is replacing the Oilfields to be adopted from the newly amended (Regulation and Development) Act 1948 to The set of goods mentioned in the Oilfields (Regulation and Development) strengthen domestic oil and gas production and list annexed to the table specified in Amendment Bill, 2024. reducing dependence on imports. the GST notification no. 3/2017-Central Tax (Rate) dt. 28-06- It is hereby suggested to mention – wherein The Lok Sabha passed the Oilfields (Regulation 2017 that will be utilised in the oilfield the expression ‘Oilfield’ shall be as defined and Development) Amendment Bill, 2024 on March wherein, the expression ‘Oilfield’ in the Oilfields (Regulation and 12, 2025 and currently awaiting President’s assent shall be as defined Development) Act 1948 and any regulation for enactment. in the Oilfields (Regulation and which replaces this Oilfields (Regulation Development) Act, 1948. and Development) Act 1948. Hence, it is suggested to consider the definition of Oilfield as per this Oilfields (Regulation and Development) Act 1948 which would be replaced with new regulation. 5 GST notification no. 3/2017-Central Suggested modification Line Pipelines, Barges and Vessels are already Tax (Rate) dt. 28-06-2017 included in the list of notified equipment, but for [Concessional CGST rate for more clarity, it is recommended that specific usage supplies to Exploration and is also covered. Production] Specific usage would provide more clarity to Oil & (i) Line Pipeline for flow or gas companies & related service providers. export purpose applicable for use in offshore & onshore fields. (ii) Derrick / Crane barges, Work & Accommodation Barges (iii) Divers Support Vessels (DSV) 6 Extension of the policy from leasing Suggestion In order to provide a boost to Oil & Gas production of the equipment to Supply & in India, the proposed policy coverage should be services facilities also extended to Supply & Services also. 3S. No. Section no. of the draft Comments/ suggestion/ Detailed rationale Notification suggested modification Text of the Section Many Oil & Gas blocks are not developed due to marginal economics, leading to overdependence on imports. 7 GST notification no. 3/2017-Central Clarification Does “production and well platforms/installation for Tax (Rate) dt. 28-06-2017 oil” refer to onshore/offshore production & wellhead [Concessional CGST rate for platforms in its entirety being available for lease? supplies to Exploration and May please be clarified. Production] –Sl. No. 9 of List Process, production and well platforms/installation for oil, gas or CBM and water injection including items forming part of the platforms/installation and equipment required. . . required for platforms/installations 8 Clause 2 (i)Introduce a minimum asset base (i) Ensures only creditworthy, financially stable requirement of USD 75 million for group for entities enter the market, reducing default risks The oilfield equipment so leased registration of oilfield equipment leasing and aligning with global leasing norms. out may be held by the financial companies in GIFT City. institution in IFSC either on (ii) Ensures financial sustainability of leasing ownership basis or on lease-in- (ii)Introduce a minimum Profit After Tax (PAT) entities, reducing systemic risks associated lease-out basis." threshold of USD 20 million at group level for with financially weak players eligibility. 10 Clause 1 & Annex I Explicitly include both onshore and offshore Prevents ambiguity and ensures 4S. No. Section no. of the draft Comments/ suggestion/ Detailed rationale Notification suggested modification Text of the Section "The definition of the term 'oilfield oilfield equipment in the definition. Refer to comprehensive leasing coverage for all oilfield equipment' is proposed to be the list under Notification No. 03/2017- operations by explicitly referring to the GST adopted from the list of relevant Central Tax Rate, which covers drilling rigs, notification list for clarity. goods annexed to the table production platforms, workboats, and specified in the GST notification." support vessels. 11 Annex I Include "Accommodation Barge" as oilfield While Barges are specifically covered as ocean "The set of goods mentioned in the equipment, referring to workboats and support vessel and therefore is a part of ship leasing list annexed to the table specified in vessels under Notification No. 03/2017- framework, it is recommended to specifically cover the GST notification... shall Central Tax Rate. Accommodation barges as oil filed equipment as collectively be referred to as 'Oilfield they are essential for offshore operations, providing equipment'." housing for offshore personnel and thus should be part of oilfield equipment leasing framework. Their inclusion aligns with the GST notification's coverage of marine support vessels. 12 Clause 1 Add "Charter Hire" terminology to the In the Indian context, leasing of oilfield equipment "Operating lease, including any permissible leasing structures alongside is commonly referred to as "on Chartered Hire hybrid of operating and financial Operating Lease and Finance Lease. basis." Many industry stakeholders may not lease, of 'oilfield equipment' shall be interpret leasing as synonymous with charter a financial product..." hiring. Including this term will ensure clarity and align with industry practice, facilitating smoother implementation. 13 Page 4 (i)‘Oilfield equipment’ should be more (i) The notification’s long-term relevance could be extensive with a scope to add more enhanced by ensuring the definition of ‘oilfield equipment to sustain future needs and equipment’ (based on the GST Notification No. platform rigs. 3/2017) evolves with technological advancements. For e.g. equipment such as (ii) Please provide the list of equipment which carbon capture and storage (CSS) used in can be considered as oilfield leasing frameworks to support 5S. No. Section no. of the draft Comments/ suggestion/ Detailed rationale Notification suggested modification Text of the Section ‘oilfield equipment’ as an annexure to the draft sustainability in the sector. notification, instead of a reference. The list should be (ii) Providing the list will ensure ease of reference exhaustive.Additionally, provide a scope to and reduce ambiguity on what amounts as ‘oil field include additional equipment which may not equipment’. Additionally, providing additional scope be covered under the GST Notification No. for including such other goods will help include 3/2017 to be considered as ‘oilfield advance technologies such as digital oilfield equipment’. The suggested modification for equipment etc. under the definition and will help the above is as follows: “The set of goods align with global practices, along with enabling mentioned in the list annexed to the table GIFT IFSC to become a global leasing hub. specified in the GST notification no. 3/2017- Central Tax (Rate) dt. 28-06-2017 [Concessional CGST rate for supplies to Exploration and Production], as set out in the annexure and such other goods as maybe approved by IFSCA that will be utilised in the oilfield wherein, the expression ‘Oilfield’ shall be as defined in the Oilfields (Regulation and Development) Act, 1948. Explanation: The aforementioned goods shall collectively be referred to as “Oilfield equipment 6S. No. Section no. of the draft Comments/ suggestion/ Detailed rationale Notification suggested modification Text of the Section 14 Page 3 Other regulatory enablement required: (1) 9(ii) Clarification under the regulatory requirements and licensing processes under the IFSCA (Finance Company) Regulations, 2021; (2) Clarifications under the SEZ Act, 2005 read with the rules in relation to import and export of such oilfield equipment by an IFSC entity; Note: During the public consultation, comments were received from various stakeholders. Modifications, if any, were suitably carried out based on the comments received from the stakeholders and placed before the Authority in the meeting held on December 22, 2025. The comments received from the stakeholders were also placed before the Authority. 7