Ripley Group, led by Shoumik Bose, has exciting plans to expand its presence in the International Financial Services Centre (IFSC). They aim to introduce another ship to their portfolio by March, as per inside sources. Panbulk Shipping, operating from the Dubai Multi Commodities Centre (DMCC), which is the largest free trade zone in the UAE, will be a part of this expansion.
In addition to Ripley Group’s endeavors, Jaldhi Overseas has formed Jal Kumud IFSC Pvt Ltd, a new entity set to own the Panamax bulk carrier ‘Jal Kumud.’
Other companies seeking to establish themselves in the IFSC arena include Star Matrix Ltd, led by Sanjeev Jain and his son Siddhant, which specializes in offshore fleet services (deep sea anchor handling tugs) and ship recycling, with its base in Hong Kong.
Alphard Maritime Group, promoted by Captain Alok Kumar, with offices in Singapore, Dubai, and Greece, is also said to have applied for permission to operate from IFSC.
Propel Shipping Pte Ltd, a Singapore-based dry bulk ship operator, is among the entities that have reportedly submitted registration applications. It is a part of the ACT Group, headquartered in Gandhidham, Gujarat, which provides comprehensive sea trade and logistics solutions.
It’s worth noting that Star Matrix, Alphard Maritime Group, and Propel Shipping have reportedly obtained provisional or in-principle approvals from the IFSC Authority to engage in business.
As of August 31, the Directorate General of Shipping reported a total of 1,528 ships registered under the Indian flag within the Domestic Tariff Area (DTA), boasting a combined gross tonnage (GT) of 13.70 million. This underscores India’s significant maritime presence.
Interestingly, despite the potential advantages of transitioning to the IFSC framework, Indian fleet owners currently operating from the DTA have not yet pursued the transfer of their ships to the IFSC.
One industry source explained, “The attempt seems to be to say give me more benefits because I am in DTA. I find it rather strange that Indian owners have often complained about taxes and non-level playing field compared to foreign flag ships for so long and have extracted concessions and subsidy from the government in the name of the same, and now when a zone has been created which gives them parity, the only argument they have is that the new regime should not focus on pulling tonnage from Mumbai to Ahmedabad.”
This hesitance among DTA ship owners can be attributed to the significant advantages they currently enjoy in handling government-owned or controlled cargo.
On October 5, the Directorate General of Shipping revised the priority sequence related to the right of first refusal (RoFR) granted to local shipping companies in public tenders. This change was prompted by the emergence of a new category of fleet owners located in the Gujarat International Finance Tec-City (GIFT City), India’s inaugural International Financial Services Centre (IFSC) under the Special Economic Zone Act.
The updated policy grants top priority for exercising the RoFR to Indian-built, Indian-flagged, and Indian-owned ships, followed by Indian-built, Indian-flagged, and Indian IFSC Authority-owned vessels.
Second priority goes to foreign-built, Indian-flagged, and Indian-owned ships, followed by foreign-built, Indian-flagged, and Indian IFSC Authority-owned vessels.
The third priority is reserved for Indian-built, foreign-flagged, and foreign-owned ships.
An executive from one of the leading Indian shipping companies explained, “The Indian flag DTA ships should always get top priority in the right of first refusal process. IFSC tonnage can be second priority during RoFR because they have to offer something. IFSC cannot be equal to the Indian flag operating under the Domestic Tariff Area because we pay taxes and you have to give us some benefit for paying taxes.”
Nonetheless, another industry source suggested that DTA ship owners’ reluctance could be driven by their desire to limit the supply of Indian flag ships, thereby securing better rates from state-owned companies during public tenders and continuing to receive subsidies from the government.
Under a government-approved subsidy scheme, Indian fleet owners are entitled to an extra 5-15 percent on charter rates, depending on the ship’s age, for vessels registered in India after February 1, 2021. The government has allocated a corpus of Rs1,624 crore to be disbursed as subsidies over five years, aimed at bolstering Indian tonnage by transporting crude oil, LPG, coal, and fertilizer cargo for state-run firms.
Of this sum, Rs931.46 crore is earmarked for crude oil, Rs520.76 crore for LPG shipments, Rs155.61 crore for coal, and Rs16.23 crore for fertilizers. The potential shift of DTA ship owners to the IFSC could stimulate competition and ultimately result in better rates for state-owned firms, according to the industry source.