Ship Leasing In GIFT City,IFSC
Global Overview:
Ship leasing has been a significant aspect of the maritime industry for many years. Shipping companies often use leasing arrangements to acquire vessels without the substantial upfront capital investment required for purchasing.
Over the years, the popularity of ship leasing has fluctuated based on economic conditions, regulatory changes, and shifts in the shipping market. The ability to manage fleet size dynamically and respond to changing market conditions has made leasing an attractive option for many shipping companies globally.
Ship Leasing in India:
India has a significant maritime history, and its shipping industry has evolved over the years. For the most up-to-date and detailed information on the history of ship leasing in India and its comparison to global trends, it’s recommended to consult recent industry reports, academic research, and news sources that cover developments in the Indian maritime sector. Additionally, contacting relevant industry associations or experts in the field can provide valuable insights.
India’s geographical location and its reliance on maritime trade further contribute to the importance of the shipping industry. The country’s ship leasing landscape is likely influenced by factors such as changes in shipping regulations, economic conditions, and global trade dynamics. The Indian shipping industry has traditionally involved both domestic and international players. Ship leasing in India is influenced by global trends, and Indian companies often adopt leasing arrangements similar to those prevalent in other parts of the world.
Define the word “Ship” and “Ship leasing”:
- “Ship” shall include any watercraft, used or capable of being used in navigation by its own propulsion, in, above, or under the water but does not include fishing or sailing watercraft.
- “Ship lease” shall include operating lease, and hybrid of operating and financial lease, of a ship or ocean vessel, engines of ship or ocean vessel, or any other part thereof.
Types Of Leasing:
1.Ship Operating Lease:
A. Permissible Activities under operating lease
A lessor in IFSCs shall be permitted to undertake all or any of the following activities:
(i) Operating lease;
(ii) Voyage Charters, Contract of Affreightments, employment in shipping pools and all other legal commercial transactions for employment of ships;
iii) Asset Management Support Services for assets owned or leased out by the lessor or by any of its Group Entities set up in IFSCs in India;
(iv) Sale and lease back, purchase, novation, transfer, assignment, and such other similar
transactions in relation to ship lease;
(v) any other related activity with the prior approval of the IFSCA.
B. Capital Requirement:
(i) A minimum owned fund of USD 200,000 or its equivalent in freely convertible foreign currency, is to be maintained at all times by the entity as specified in item no. 1 of Schedule of the Finance Company Regulations.
ii) In addition to (i) above, the IFSCA may specify maintenance of additional capital as a risk management measure, based on the nature and scale of business of the lessor.
2.Ship Financial Lease:
A. Permissible Activities under financial lease and hybrid of operating and financial lease:
A lessor in IFSCs shall be permitted to undertake all or any of the following activities:
(i) Financial lease;
(ii) Hybrid of financial and operating lease;
(iii) Permitted Activities for operating lease
(iv) any other related activity with the prior approval of the IFSCA.
B. Capital Requirement:
(i) A minimum owned fund of USD 3 million or its equivalent in freely convertible foreign currency, is to be maintained at all times by the entity as per item no. 2 of Schedule to the Finance Company Regulations;
(ii) In addition to (i) above, the IFSCA may specify maintenance of additional capital, as a risk management measure, based on the nature and scale of business of the entity.
Other Regulatory framework:
Mode Of Conducting Business:
The applicant shall set up operations in an IFSC in the form of a Company or a Limited Liability Partnership (LLP) or a Trust or a Branch and in any other form as may be specified by the IFSCA from time to time.
Currency for Conduct of Business:
All transactions undertaken by a lessor shall be in a freely convertible foreign currency only. However, the lessor may defray their administrative expenses in INR by maintaining a separate INR account.
Maintenance of Books of Accounts, Records and Documents:
The lessor shall maintain its books of accounts, records and documents as required under applicable law. The books of accounts and their financial information shall be maintained in any freely convertible currency.
Submissions of Report / Information:
(i) The lessor shall furnish the following information to the IFSCA within 15 days from the finalisation of annual financial statements:
a. Audited Annual financial statements.
b. Confirmation of compliance with the applicable regulations, circulars, guidelines and directions issued by the IFSCA.
c. Confirmation of compliance with capital requirement and details thereof.
d. Details of material regulatory action, if any, against the Promoters, Key Managerial Persons or persons controlling the lessor
(ii) The lessor shall submit all the financial information, expressed in USD, to the IFSCA, unless
otherwise specified.
