Ship leasing activities in Special Economic Zone
The Ministry of Commerce and Industry ("MoCI"), vide notification dated March 14, 2024, introduced amendments to the Special Economic Zones ("SEZ") Rules, 2006 ("SEZ Rules") by issuing the SEZ (Second Amendment) Rules, 2024. Pursuant to the amendment, the scope of Rule 21B is broadened to include units dealing in ship leasing activities (earlier it just included provisions related to units dealing in aircraft leasing activities). A unit in an IFSC authorised to undertake aircraft or ship leasing activity, can utilise office space or manpower or both, of another unit set up in an IFSC authorised to undertake aircraft or ship leasing activity
Clarification in relation to the permissible activities specified under the 'Framework for Ship Leasing'
The IFSCA, vide circular dated April 2, 2024, clarified that a lessor which has obtained a certificate of registration may undertake the permissible activities specified in clause 3 (E) (ii) of the 'Framework for Ship Leasing' ("SL Framework") (i.e. voyage charters, contract of affreightments, employment in shipping pools and all other legal commercial transactions for employment of ships) only if such lessor has absolute or lease hold right over the ship/ocean vessel.
Additional requirements for carrying out permissible activities SL Framework
IFSCA, vide circular dated May 8, 2024, outlined additional requirements for carrying out permissible activities by a finance company under the SL Framework. An applicant under the SL Framework or a lessor, who has obtained a certificate of registration under Regulation 3 of the IFSCA (Finance Company) Regulations, 2021, must not undertake transactions which involves transfer of the ownership and/ or leasehold right of a ship or ocean vessel from a person resident in India to an entity set up in the IFSC, for the purpose of providing services solely to person resident in India. However, the applicant or lessor may acquire a new ship or ocean vessel or enter into a new leasehold right contract with person resident outside India so as to cater to person resident in India.
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