Global shipping companies make a beeline to reflag vessels in India

The move is part of a larger strategy discussed by global companies with PM Narendra Modi to base their tonnage in India

Buoyed by a conducive operational and regulatory ecosystem for setting up operations, global shipping companies are planning to register more vessels under the Indian flag after the recently-concluded India Maritime Week, industry and government sources said.

 

“French carrier CMA CGM was the first to make a move. Since then, we have seen an overwhelming interest from players to reflag their vessels in India. Beyond the announcements by global players that have already happened, there are more discussions taking place from leading carriers,” a senior government official said.

 

He said the move is part of a larger strategy discussed by global companies with Prime Minister Narendra Modi during the Maritime Leaders Forum to base their tonnage in India. They have placed their bets on domestic cargo growth, which would be driven by economic growth.

 

“We are also looking at India’s growing coastal trade and want to take advantage of the cabotage laws by having our vessels flagged in India, so there’s going to be more momentum on this, going forward,” a global executive from a large European shipping company said.

 

The Coastal Shipping Act was recently passed by Parliament in the monsoon session. It has removed the requirement for Indian-flagged vessels to acquire a general trading licence to operate on its coastal waters. There are also statutory conditions for foreign-flagged vessels to acquire a general trading licence.

 

CMA CGM, whose headquarters PM Modi had visited earlier this year during a visit to France, was the first to reflag four of its vessels under the Indian flag.

 

Last week, at the India Maritime Week, Danish carrier AP Moller-Maersk also reflagged two of its vessels. The momentum on this would pick up, going forward, according to Christopher Cook, managing director (MD) for South Asia. On Monday, Geneva-headquartered Mediterranean Shipping Company’s Soren Toft also announced plans to reflag 12 of its vessels in India.

 

The three companies represent over 40 per cent of the world’s container shipping volumes.

 

According to experts, having vessels under the Indian flag is important as it increases India’s national tonnage and allows freight revenue to remain in the country. In September, Modi flagged that India pays ~6 trillion to foreign operators in shipping costs a year.

 

Experts say that this also creates opportunities for Indian seafarers and maritime stakeholders.

 

A senior Directorate General of Shipping official said that talks are being held to set up a second ship registry in IFSCA GIFT City for easier tax and regulatory compliance.

 

“Right now, the deliberations are to ensure that the registry is set up with an inclusive regulatory set up. We don’t want a flag of convenience regime similar to some countries which have no cargo or vessels but a registry, where there are accountability issues,” he added.