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Indian Govt to ban 25-year-old oil tankers, bulk carriers, and other ships from Indian waters

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NEW DELHI : The government of India has decided to ban 25-year-old oil tankers, bulk carriers, and general cargo vessels, both Indian registered and foreign flagged, from calling Indian ports to load and unload cargo as it looks to encourage a younger fleet to improve safety, meet global rules on ship emissions and protect the marine environment from pollution during mishaps.

The age restriction, though, will only be applicable to Indian and foreign flag vessels that require a license from the Directorate General of Shipping (D G Shipping) under Section 406 and 407 of the Merchant Shipping Act, 1958. Further, the age limit will also be applicable to vessels granted exemption from licensing requirements under Section 406 and 407 of the M S Act, commonly referred to as Cabotage rules.

Section 406 prescribes that “no India ship and no other ship chartered by a citizen of India or a company or a cooperative society shall be taken to sea from a port or place within or outside India except under a license granted by the Director General under this section”.

According to Section 407 of the M S Act, “No ship other than an Indian ship or a ship chartered by a citizen of India or a company or a cooperative society shall engage in the coasting trade of India except under a license granted by the Director General under this section”.

In the case of gas/chemical carriers, fully cellular container vessels, cement carriers, harbour tugs (those operating within ports), specialised vessels such as diving support, geo-technical, pipe laying, seismic survey, well simulation and accommodation barge, the age limit for operations has been set at 30 years.

For dredgers, the maximum age limit for operations will be 40 years.

For offshore fleet, anchor handling tugs and tugs involved in long tow, non-self-propelled ocean-going cargo carrying barges and any other vessels, the age cap will be 25 years, according to a 24 February order written by the Director General of Shipping (D G Shipping) seen by ET Infra.

Offshore fleets equipped with Dynamic Positioning 2 or DP 2 that are above 25 years will be permitted to operate up to 30 years.

The age norms will not be applicable to passenger vessels, FSRU, FPSO, and Drilling/ Production units certified under MODU/ISPS Code.

All ‘Existing Vessels’ regardless of the age, affected by the maximum age prescribed, will be allowed to operate up to three years from the date of the order.

An ‘Existing Vessel’ is defined as a vessel already registered under the Indian flag on or before the date of issuance of the order, and a vessel for which, a Memorandum of Agreement to acquire had been entered into and at least l0 percent of the purchase price of the vessel is deposited by the buyer on or before the date of the order.

Vessels acquired/to be acquired under the Indian Controlled Tonnage regime would also be treated on par with Indian flag vessels.

Foreign flagged vessels requiring licence under Section 406 and 407 of the M S Act and already engaged in charter on the day of the order, will also be allowed to operate up to three years from the date of the order or until the charter period, whichever is earlier.

Second hand ships, across categories, of 20 years and above cannot be acquired by Indian entities and registered under the Indian flag.

The general trading license of ships will be withdrawn when they reach the prescribed age limit for operations.

The D G Shipping has also stipulated various compliance checks on quality and safety of new ships, second hand purchases and existing vessels based on age slabs.

The age and other qualitative parameters will also apply to foreign flag vessels requiring licence under Section 406 and 407 of M S Act for operating within the Exclusive Economic Zone of India whether chartered by an Indian entity or otherwise. In such cases, the maximum age of the vessel shall be calculated on the date of commencement of service or carriage of cargo.

The age of the vessel will be computed from the ‘Date of Delivery’ as mentioned in the Cargo Ship Safety Construction Certificate or any other Statutory Certificate issued under the International Maritime Organisation (IMO) Convention/Code.

“Quality tonnage is paramount for safe and secure expansion of the maritime sector and to achieve sustainability in ocean governance. The safety of life at sea and ships depends on the quality of tonnage registered under the flag of a country,” according to D G Shipping, India’s maritime regulator.

“The average age of the world fleet is on the declining trend, (but) the average age of the Indian tonnage is on the increasing trend over the years,” the DG Shipping said.

The International Maritime Organisation, the U N body that regulates global shipping, has adopted an initial strategy for reduction of GreenHouse Gas emissions. To achieve the targets defined by the IMO, vessels need to be transformed to run on alternate fuels and age norms will assist in ensuring gradual phasing out of fossil fuel ships and entry of alternate/low carbon energy efficient ships, it said.

Prior technical clearance is not required for acquisition of vessels below 25 years of age, according to the existing guidelines on registering ships under the Indian flag. Such clearances, though, are mandated for vessels of 25 years and above.

The age norms are being introduced to improve the quality of Indian tonnage and supplements a government plan to promote flagging of ships in India.

In 2021, the government unveiled a subsidy scheme for Indian flag ships for moving state-owned cargo.

Under the subsidy scheme, Indian fleet owners get a 5-15 percent extra on charter rates, depending on age slabs, on ships registered in India after February 1, 2021.

The government has budgeted a corpus of Rs1,624 crore to be disbursed as subsidy for moving crude oil, LPG, coal, and fertiliser cargo for state-run firms, over five years, to boost Indian tonnage.

The absence of age norms has allowed Indian charterers (those hiring ships) to go for older ships and benefit from “better rates” as older tonnage is available at “lower freight rates” as compared to younger vessels, resulting in lower transportation costs.

Charterers have also stayed clear of putting age norms in tenders in the absence of stipulation by the maritime regulator.

“There is a need to modernise the Indian fleet, which requires extensive review of the requirements of the registration and operation of ships to ensure quality tonnage under the Indian flag. There is also a need to create a level playing field for Indian ships by applying the requirements for quality tonnage over the foreign flagged vessels also which are required to apply for license under Section 406 and 407 of the M S Act,” the D G Shipping added.

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