Ship operators and industry representatives have urged the government to exempt businesses operating from International Financial Services Centres (IFSCs) from having to secure a licence from the Directorate General of Shipping under the recently introduced Coastal Shipping Act.
Under the draft rules being framed around the new law, any vessel that is not Indian-flagged and is chartered by an Indian entity is currently required to obtain a licence from the Directorate General of Shipping before it can engage in coastal trade. Critics say this requirement could undermine the competitiveness of IFSC-based ship leasing and chartering firms, especially when dealing with foreign flag vessels.
Stakeholders argue that for IFSC entities, which function in a special regulatory and tax-neutral environment, the licence requirement is unnecessary particularly where the vessels are leased to foreign parties and the business does not involve direct operations in India’s Domestic Tariff Area (DTA). They contend that in such cases the business should be treated as international trade, not subject to the same licensing norms applied to domestic operators.
Industry voices have pointed out that stringent licensing norms have driven some Indian-origin ship leasing and operating companies to relocate to jurisdictions like Singapore or Dubai, where regulatory hurdles are lower. They say that relaxing the licensing requirement for IFSC entities would help bring such operations back to India, support Indian capital participation, and boost the country’s maritime services ecosystem.
At the same time, the ship operators have acknowledged that the Directorate General of Shipping should retain oversight powers, such as the ability to determine which flag states are acceptable for vessels operating under these relaxed norms, potentially including a blacklist of undesirable flags.
The debate comes as the government finalises implementation rules under the new Coastal Shipping Act, which replaces older maritime licensing provisions and is designed to modernise India’s coastal trade regulatory framework. A key point of contention remains how to balance regulatory controls with efforts to attract global shipping and leasing business to India’s IFSC hubs while safeguarding broader maritime policy goals.