Govt to reform ship ownership new Merchant Shipping Bill

The Merchant Shipping Bill, 2024, is said to define an Indian vessel as one that is owned by a citizen of India, a Non-Resident Indian, an Overseas Citizen of India, a company or a body established under any Central Act which has its registered office or principal place of business in India, or any such other person or body as the Central government notify. However, the proportion of ownership for registration purposes will be prescribed in the rules.

The government may ease nationality norms for registration of ships by allowing vessels that are “substantially owned” by Indian entities and those owned by NRIs, OCIs and Limited Liability Partnerships (LLPs) to register under the Indian flag. The exiting Merchant Shipping Act, 1958 stipulates that only a ship that is wholly owned by an Indian citizen, company or society can be registered under the Indian flag.

Since the ownership requirement is written into the Act, it was not possible to expand the scope of entities that are allowed to register ships in India without going to Parliament and amending the law. By prescribing rule-making powers for ship registration after the Bill is passed by Parliament and signed into law, the Ministry of Ports, Shipping and Waterways is seeking flexibility in ownership structure so that it can expand the scope whenever it wants, a government official said.

BBCD is a form of financing for ship acquisition, whereby the purchase is typically done by paying one-fourth of the total cost of the vessel as down payment while the balance is paid in instalments over the demise period, typically ranging from three-five years.

Currently, a BBCD ship is allowed to be converted to an Indian flag ship only when the last instalment is paid to the overseas owner. Till then, it flies the flag of the jurisdiction where it is registered. The Ministry plans to permit ships acquired through the BBCD route to be registered even before the last instalment is paid.

The Union Cabinet on Wednesday approved the Merchant Shipping Bill, 2024 which will replace the existing Merchant Shipping Act 1958. The new Merchant Shipping Bill aims to significantly reduce the compliance burden on vessels by promoting ease of doing business. The provisions of the Bill relating to expansion of eligibility criteria for owning a ship under the Indian flag, registration of Indian flagged vessels without the need to visit Indian ports, enabling registration of chartered vessels and temporary registration for ships sought to be recycled in India are aimed at promoting ease of doing business, the official stated.

The Bill enables electronic means of registration, and grants statutory recognition to electronic agreements, records, and logbooks, in addition to electronic licenses, certificates and payments. The Bill also includes an enabling provision to notify an electronic database for inspections and conducting inspections based on ship risk profiles attributed to ships, thereby creating an efficient port state control and coordinated inspection mechanism.