The Directorate General of Shipping last month amended the guidelines which stipulate the conditions for exercising the ‘Right of First Refusal’ in case of chartering of vessels through the tender process for any kind of requirement.

The Merchant Shipping Act, 1958, as amended, empowers the Director General of Shipping to grant license to foreign flag vessels.

In November 2002, detailed guidelines for grant of license to foreign flag vessels had been laid down by the Director General of Shipping. These guidelines, which among other things specify the conditions for exercising the ‘Right of First Refusal’, have been amended from time to time.

The recent decision to amend the guidelines that stipulate the conditions for exercising the ‘Right of First Refusal’ was taken in response to a proposal by the Ministry of Shipping for initiating policy measures with a view to promote Indian shipyards.

Shipyard_Foreign Flag Vessels_ProjectsMonitorThe Committee of Secretaries which examined the proposal by the Ministry of Shipping agreed that the modality of exercising the ‘Right of First Refusal’ needed to be amended so as to include the category of ‘Indian built’ Indian flag vessels, followed by Indian flag vessels, for the purpose of granting of license under section 406 and 407 of the Merchant Shipping Act, 1958. The two sections deal with Indian ships and chartered ships to be licensed and licensing of ships for coasting trade.

In October 2010, the Directorate General of Shipping, after holding discussions with stakeholders including the shipping industry and the Indian National Ship-owners Association, decided that in the event of the ‘Right of First Refusal’ not getting exercised by any bidder as per existing guidelines, the Right of Refusal would be exercised by Indian citizens/companies/co-operative societies having Bare Boat Charter cum Demise vessels, failing which, by any other owner or his agent offering foreign flag vessel built in India.

With the latest amendment carried out to include a new category of vessels, the ‘Right of First Refusal’ would be exercised by Indian built Indian flag vessels followed by Indian flag vessels, Indian built foreign flag vessels and Indian citizens/companies/co-operative societies having BBCD vessels.

The change in the eligibility criteria for exercising the Right of Refusal has been announced through a shipping development circular dated November 21st, 2013, by the Directorate General of Shipping.


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