AHMEDABAD : India, despite having a large coastline, growing domestic market and international seaborne trade, deep-rooted maritime traditions and skilled seafarers, continues to have a smaller share in the international shipping sector, according to a report submitted to IFSCA.
It is thus becoming a net importer of shipping services especially ship finance, the report of the Committee for Development of Avenues for Ship Acquisition, Financing and Leasing from GIFT IFSC.
The panel was constituted by the International Financial Services Centres Authority (IFSCA) in June and submitted its report on October 28, the Gandhinagar-based regulator said in a statement.
IFSCA, established in April last year, is a unified authority for the development and regulation of financial products, financial services and financial institutions in the international financial services centre (IFSC) in India. Currently, GIFT IFSC is the maiden IFSC in India.
The panel headed by Vandana Aggarwal carried out a 360-degree examination of the existing legal and regulatory regime in IFSC in India for ship acquisition, financing and leasing, comparing it with those of the global top-ranking marine hubs.
It developed financial models to gauge the gap in costs, including capital and operating costs and tax costs, of doing this business in IFSC and these hubs, said the statement adding that it has identified bottlenecks to the realisation of India’s shipping sector’s growth story.
It held extensive stakeholder consultations towards working out the changes required for seeding the robust ship acquisition, financing and leasing (SAFAL) regime at India-IFSC.
To this end, it also holistically considered the supportive links of shipbuilding, flagging, operating, and repairs and recycling in the shipping value chain, it said.
The focus remained on enabling cost-effective and competitive delivery of shipping services on ships owned and leased from India-offshore IFSC which is on par with overseas competitors, it added.
“The Report provides useful recommendations for realising the true transformational potential of India’s shipping industry. It finds that the time is opportune for imparting a brand value to Indian-flagged vessels,” it said.
This can be done by carving out a share in global cross trades, securing gainful transactions for India’s marketplace, promoting de-carbonisation and greening of the blue oceans, and leveraging India-IFSC Maritime for achieving the Maritime India Vision 2030 and beyond, it said.
Essentially, it said, the committee has found that the concept of IFSC, conceived for financial services, should be naturally extended to SAFAL products and services, including ancillaries.
This may entail notifying vessel leasing or operating lease of any equipment as a ‘financial product’ to enable ship leasing entities to set up a unit in IFSC, the report said.
Direct and indirect tax changes have been proposed based on the competitive gaps identified through the financial models developed for India-IFSC, it added.