In a move towards incentivising 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.
About:
Background: 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.
Revised Guidelines:
But from now on, 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 lowest bidder (L1) quote.
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.
Significance:
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.
The review is in line with the need to give a long-term strategic boost to the domestic shipbuilding industry.
Way ahead: A policy in this regard will be unveiled by Union Minister for Shipping in Mumbai on February 19, 2019 during the inauguration of the two-day Regional Maritime Safety Conference.
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