Directing towards the current “legal and regulatory framework” concerned to ship leasing and financing exercises in India is “less favourable” with respect to the hubs all over the world like Panama, Dubai and Singapore, a statement tendered to the International Financial Services Centres Authority (IFSCA) at GIFT City has suggested the revision in the GST and SEZ Act, 2005, to make it lucrative.
“Financing and insuring ships is a specialised area. Indian agencies (banks, insurance companies, pension funds, alternate capital and others) lack exposure to maritime finance and insurance and hence, tend to be non-risk takers or impose lengthy, time-consuming procedures, as mentioned by the IFSCA committee.” It is directed towards how the cost of financing borrowing and insurance (hull, cargo, and protection and indemnity) is more adverse in India with respect to international things specifically in London and Singapore that provides huge rival rates.
“Besides, India’s tax regime, by and large, are not encouraging to the shipping industry and are not on par with tax regimes of Singapore, Malta, Cyprus and Panama, where the majority of the international carriers are registered… Similarly, GST provisions on shipbuilding, ship managing, bunkering, repairing, etc are skewed in favour of foreign entities, rendering Make-in-India unattractive, as added in the report made through the committee lead by the former senior economic advisor to the central government Vandana Aggarwal.
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The other members of the 11 member panel are Mandeep Randhawa Director, Ministry of Shipping, Nebu Oommen, ship surveyor, Directorate General, Shipping, Sandip Shah, IFSC department, GIFT SEZ Ltd, GVN Rao, Associate Professor of Law at Gujarat Maritime University, Kalpesh Vithlani, General Manager (Projects), Gujarat Maritime Board, Dipesh Shah, executive director, IFSCA, with others.”
The report, recommends several revisions that direct towards the GIFT city in Gujarat that does not pose seaports and thus suitable amendments are required to be furnished to the laws of the SEZ to “exempt ship leasing and related business from bringing in goods physically into SEZ”. it indeed urges IFSCA to tell the ports as SEZ towards IFSC vessel and exempt ship leasing business in IFSC from Net Foreign Exchange Earning needs as ship leasing business will not be held as a Net Foreign Exchange earner in the duration of 5 years.
Asking for exemption in the IFSC regime the report said that elaborating the definition of ship leasing to engage bare-boat charter, time charter, voyage charter, and more, and urge the government to suggest ship leasing as a “financial product”. Showing the taxation hurdles in India, the report mentioned that the overseas remittances via India are “cumbersome” and are liable to avail a chartered accountant certificate.
“Gains arising on transfer or sale of vessels or transfer and sale of partnership interests or shares of SPV holding the vessels, attract capital gains tax, they said.”
“It is strongly felt that it is time that Indian banks also explore the lucrative options of lease financing for India-IFSC ship owners and ship operators. Many enterprises are now medium-sized and have a good track record of operating ships. They have the necessary market information and expertise to operate vessels commercially, mentioned in the report.”
