Logistics

Fleet owners with ships built, flagged locally will get top priority for govt cargo support

Our Bureau Mumbai | Updated on October 22, 2020 Published on October 22, 2020

Shipping Minister Mansukh Mandaviya   -  The Hindu

Ships built and registered in India and owned by Indian entities will get top preference for carrying cargo or providing other services such as dredging and offshore oil exploration support activities to State-run entities, according to the new norms on Right of First Refusal (RoFR) announced by the Shipping Ministry on Thursday.

The second priority will be accorded to foreign built, Indian flagged and Indian owned ships followed by Indian built, foreign flagged and foreign owned vessels.

Eligibility

All Indian flag vessels up to the date of issue of the new circular on RoFR by the Director General of Shipping shall be deemed to be Indian built vessels and will get first priority.

A foreign flagged vessel permitted by the DG (Shipping) 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, shall be deemed to be an Indian built ship, if 25 per cent of the contract money has been paid to the Indian shipyard and 50 per cent of the hull fabrication has been completed, as certified by a Recognised Organisation.

The duration of licence to such chartered foreign flag vessel shall be limited to the period of building of the ship in India, as specified in the shipbuilding contract. BusinessLine reported the revised guidelines on October 20.

Giant step

The revision of RoFR licensing conditions is a giant step towards ‘Atmanirbhar’ and promote demand for ships built in India, said Shipping Minister Mansukh Mandaviya.

The new rules on RoFR will be enforced when State-run firms and government departments float global tenders to hire ships where the transportation contract value is more than ₹200 crore. As per the revised Make in India policy, RoFR is not applicable for ship hiring contracts with value below ₹200 crore; these contracts can only be given to Indian shipping companies.

Under the RoFR rules that have been followed for many years, local fleet owners got a right to match the lowest rate offered by a foreign flag ship in tenders issued by State-run firms for hiring ships under the chartering guidelines framed by the Director General of Shipping. If Indian shipping companies declined, then only the foreign flag ship, that had quoted the lowest rate, was allowed to carry the cargo or provide services. The RoFR was enforced according to a pecking order of priority.

The Shipping Ministry said that the re-designed RoFR seeks to further incentivise shipbuilding by providing additional market access and business support to ships built in India.

Local shipbuilders are already entitled to a subsidy under a ten-year shipbuilding financial assistance scheme that began in 2016. The government has disbursed ₹61.05 crore till date under this scheme.

“The revised RoFR policy will promote ‘Make in India’ initiatives through self-reliance and will give a strategic boost to the domestic ship building industry, contributing towards long-term economic growth of India”, Mandaviya added.

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Published on October 22, 2020
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