New Delhi - In response to the commencement of operations from the Gujarat International Finance Tec-City (GIFT City), India’s first International Financial Services Centre (IFSC) under the Special Economic Zone Act, the Indian Government has made alterations to the priority sequencing of the right of first refusal (RoFR) policy. This change has become necessary to accommodate a new category of fleet owners and address the evolving dynamics of India’s maritime industry.

The RoFR policy, a Government-mandated cargo support initiative for domestic fleet owners, has undergone previous amendments, with the last revision dating back to January 2021. That update linked the RoFR policy to the ‘Make in India’ initiative, thereby promoting the demand for locally built ships.

The recent adjustments to the RoFR policy now prioritize the exercise of RoFR in the following manner:

1. First Priority: This will be accorded to Indian-built, Indian-flagged, and Indian-owned ships. Following closely behind are Indian-built, Indian-flagged vessels that are owned by the Indian IFSC Authority.
2. Second Priority: Foreign-built, Indian-flagged, and Indian-owned ships will be granted the second priority, followed by foreign-built, Indian-flagged vessels owned by the Indian IFSC Authority.
3. Third Priority: The third priority goes to Indian-built, foreign-flagged, and foreign-owned ships.

These changes were officially notified by the Directorate General of Shipping on October 5, 2023, with the primary objective of accommodating the interests of the emerging category of ship owners and bolstering national tonnage, according to Government officials.

Under the RoFR rules, domestic shipping companies are granted the right to match the lowest rate offered by a foreign-flag vessel in tenders issued by state-run firms. However, if Indian shipping companies decline this opportunity, the cargo can then be carried by the foreign-flag ship that quoted the lowest rate.

It’s important to note that the RoFR policy comes into play only when the rate offered by Indian participants in a tender falls within a 20 per cent range of the lowest bid provided by a foreign ship owner, aligning with the purchase price preference extended to Indian entities.

The RoFR rules initially introduced in January 2021 by the Directorate General of Shipping, India’s maritime regulator, already stipulated that Indian-built, Indian-flagged, and Indian-owned ships would be given top priority when state-owned firms and Government Departments floated tenders for ship hiring, cargo transportation, dredging, and offshore oil exploration support services.

These amendments to the RoFR policy signify the government’s commitment to adapting to the changing landscape of India’s maritime industry and fostering an environment conducive to the growth and diversification of the nation’s fleet ownership.