In order to promote the Make in India initiative and give incentives for ship building activity in the country, the Indian Ministry of Shipping revised its guidelines for chartering of ships by providing Right of First Refusal (RoFR) to ships built in India.
As a result, whenever a tendering process is performed 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 increase the demand for such vessels, providing them with further market access and business support.
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Before revising the guidelines, the RoFR was reserved for Indian flag vessels as per the relevant provisions of Merchant Shipping Act, 1958. The current licensing conditions have been reviewed according to the Government of India’s policy of promoting the Make in India initiative and the Public Procurement and Make in India orders dated 15.6.2017 and 28.05.2018 issued by DIPP.
The review also meets the need to provide 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 industries.
The Ministry of Shipping has also established eligibility conditions and rules for exercise of the RoFR. The RoFR would be exercised only in case the ship 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. The two instances under which the RoFR may be exercised are that the L1 bidder is a Foreigner or Company registered outside India, offering a ship not built in India and the L1 bidder is a Citizen of India OR company registered in India OR Society registered in India OR Indian Shipping company/organization with a vessel registered/flagged in India, offering a ship not built in India. Amongst the bidders able to exercise RoFR, the priority to exercise this Right would lie in sequence from the lowest to the highest bidder within the margin of purchase preference.
