To incentivise ship-building activity in the country, the Ministry of Shipping has revised its guidelines for chartering of ships by providing Right of First Refusal ( RoFR) to ships built in India.
Henceforth, whenever a tendering process is undertaken to charter a vessel, a bidder offering a ship built in India will be given the first priority to match the L1 quote.
It is expected that this priority given to ships built in India will raise the demand for such vessels, providing them with additional market access and business support.
A policy in this regard will be unveiled by Nitin Gadkari, Minister for Shipping, Road Transport & Highways, Water Resources, River Development and Ganga Rejuvenation in Mumbai on Tuesday, during the inauguration of the two-day Regional Maritime Safety Conference. Prior to the revision of the guidelines, the RoFR was reserved for Indian flag vessels as per the relevant provisions of Merchant Shipping Act, 1958.
The existing licensing conditions have been reviewed in consonance with the Government of India’s policy of promoting the ‘Make In India’ initiative and the Public Procurement and Make in India orders dated June 15, 2017 and May 28, 2018 issued by the DIPP.
The review is also in line with the need to give a long-term strategic boost to the domestic shipbuilding industry, the need to encourage the domestic shipping industry to support the domestic shipbuilding industry, and the need to develop self- reliance and a strong synergy between these vital industries for the overall long term development and economic growth of the country.
Eligibility conditions
The Ministry of Shipping has also laid down eligibility conditions and rules for exercise of the RoFR.
The RoFR would be exercised only in case the vessel being offered for charter by the lowest bidder (L1) has been built outside India.
For any bidder to exercise RoFR, his bid should be within the Margin of Purchase Preference, which will be 20% of L1.