The Union government is set to expand the eligibility criteria for vessel ownership and registration in India through the Merchant Shipping Bill, 2024. This move aims to increase India’s shipping tonnage and capture a larger share of global trade by allowing vessels chartered on a bareboat charter-cum-demise (BBCD) basis to be registered under the Indian flag.
The proposed bill will redefine an Indian vessel as one owned by an Indian citizen, Non-Resident Indian (NRI), Overseas Citizen of India (OCI), Indian companies, or any other entity notified by the central government. The government may also ease nationality requirements, allowing vessels substantially owned by Indian entities or NRIs, OCIs, and Limited Liability Partnerships (LLPs) to register under the Indian flag.
This reform comes in response to the outdated Merchant Shipping Act of 1958, which limits ship registration to those fully owned by Indian citizens or companies. With the new bill, the Ministry of Ports, Shipping, and Waterways plans to offer more flexibility in ownership structures, allowing for an expanded scope of ship registration without the need for parliamentary amendments.
Currently, ships acquired through BBCD arrangements can only register under the Indian flag once the final installment is paid to the overseas owner. The new bill proposes that such ships be allowed to register before the last installment is completed, streamlining the process.
The government’s push for reforms is part of a broader strategy to boost India’s shipping industry by lowering the compliance burden and encouraging investment. This includes provisions for easier ship registration, electronic documentation, and temporary registration for ships intended for recycling in India. The bill will also enable electronic registration and inspections based on ship risk profiles.
India's global shipping presence remains minimal, controlling just 1.4% of global tonnage as of 2022, despite handling 11% of the world’s export-import (EXIM) trade. With shipping costs to foreign companies reaching $85 billion in FY20, the government is focused on reducing dependence on foreign fleets, especially in light of recent geopolitical events like the Russia-Ukraine conflict and the COVID-19 pandemic.
The reforms align with Finance Minister Nirmala Sitharaman’s budget announcement to improve the share of the Indian shipping industry. Expanding India’s shipping tonnage is projected to cost Rs 55 trillion, with the goal of making the sector "Atmanirbhar" and globally competitive. (ET)
