India: addendum to foreign flag vessel license guidelines

The Directorate General of Shipping, India has published a circular: addendum No. 1 to the DGS Circular No. 02 of 2021 (guidelines for exercise of right of first refusal grant of license to foreign flag vessels).

The circular was published on 5 October 2023.

As it recalls the original DGS Circular No. 02 of 2021 it also recalls a notification from the Ministry of Ports, Shipping & Waterways related to the "Promotion of Make in India initiative."

The document considers developments in shipping operations, particularly in International Financial Services Centers (IFSCs), established under the International Financial Services Centres Authority Act, 2019.

This circular is amending parts of the DGS Circular No. 02 of 2021.

The amendments introduce new categories for vessels based on factors like their ownership, flag, and origin.

The amendments to DGS Circular No. 02 of 2021 are following:

In paragraphs 2, 3, 4, and for further clarity, the order of categorization will be as follows:

(a) Indian-built, Indian-flagged, and Indian-owned.
(b) Indian-built, Indian-flagged, and foreign-owned.
(c) Foreign-built, Indian-flagged, and Indian-owned.
(d) Foreign-built, Indian-flagged, and foreign-owned.
(e) Indian-built, foreign-flagged, and foreign-owned.

It is specified that all vessels flying the flag of India (i.e., registered in India) up to the date of the issuance of the new circular by the Director General of Shipping shall be deemed to be Indian-built vessels and will fall under category (a) above.

Foreign-flagged vessels permitted by the DG Shipping under Section 406 of the MS Act, 1958, for chartering by an Indian citizen/company/society who is building a ship in an Indian shipyard for registration under the Indian flag, as a temporary substitute for the Indian ship under construction, meeting the following two conditions, shall be deemed to fall under category (a) above:

(a) The 25% of the contract money has been paid to the Indian shipyard.
(b) The 50% of the hull fabrication has been completed, as certified by a Recognized Organization.

The duration of licenses for such chartered vessels shall be limited to the period of building of the ship, as mentioned in the shipbuilding contract.

The addendum specifies that the new licensing conditions come into force immediately upon issuance.

It is issued with the approval of the Director General of Shipping and Additional Secretary to the Government of India.

The document is addressed to various stakeholders, including charterers, shippers, Indian shipping companies, and shipyards.

The addendum is also addressed to government departments and ministries involved in shipping, defense, industrial policy, petroleum, and more.

For more information, please see the documents below (available only to subscribers):