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The central government is evaluating a policy framework that would allow entities based in Gujarat International Finance Tec-City (GIFT City) to register ships overseas under a calibrated model similar to the Indian Controlled Tonnage scheme. The proposal would permit a "one-in-one-out" approach, enabling companies to register one vessel abroad and the next under the Indian flag. The move follows representations from the International Financial Services Centres Authority seeking regulatory relaxations to strengthen GIFT City as a global ship leasing hub. At the same time, the government is balancing concerns from domestic shipowners about potential loss of Indian tonnage and policy advantages linked to cargo support mechanisms such as the Right of First Refusal.
The central government is examining a proposal to allow companies operating from Gujarat International Finance Tec-City (GIFT City) to register ships overseas under a regulated framework, in the past week, as part of efforts to strengthen India's position in global ship leasing while safeguarding domestic shipping capacity. The proposal is being considered in consultation with maritime authorities and financial regulators, including the International Financial Services Centres Authority. Advertisement
The framework under discussion mirrors elements of the Indian Controlled Tonnage (ICT) scheme, under which domestic fleet owners are permitted to register a portion of their vessels outside India while maintaining a base of Indian-flagged ships. For GIFT City entities, the government is evaluating a modified approach that would allow registration of one vessel overseas followed by one under the Indian registry, thereby maintaining parity between foreign and domestic tonnage.
This relaxation is being considered alongside broader regulatory requests from the International Financial Services Centres Authority, which has sought amendments to provisions under the Merchant Shipping Act, 2025. The regulator has proposed easing restrictions on ship flagging and removing licensing requirements for chartering foreign-flag vessels, particularly for international cross-trade and export-import operations.
However, the government has indicated a calibrated approach. While it is inclined to ease norms for overseas operations, including permitting GIFT City entities to charter foreign-flag ships for exclusive international routes without requiring licences, it has refrained from extending similar relaxations to coastal or export-import trade. This reflects concerns over regulatory arbitrage and the potential impact on domestic shipping operators.
Officials have also highlighted the risk that unrestricted overseas registration could reduce India's shipping tonnage at a time when the country is seeking to expand its maritime capacity. Domestic fleet owners, particularly those operating from the Domestic Tariff Area, have raised objections to granting extensive concessions to GIFT City-based entities, citing the possibility of unequal regulatory treatment.
To address these concerns, the government is examining conditions under which benefits linked to the Right of First Refusal (RoFR) policy would be restricted. Entities choosing to register ships in foreign jurisdictions may not be eligible for RoFR advantages, which provide cargo support to Indian-flagged vessels in public sector tenders.
The proposal reflects an attempt to balance two competing priorities: developing GIFT City as an international maritime financing and leasing hub, and preserving the competitiveness of India's domestic shipping industry. By introducing a controlled framework for overseas ship registration, policymakers are seeking to accommodate industry demands while maintaining regulatory alignment with national shipping objectives.
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