How the New Coastal Shipping Exemption Could Transform Maritime Finance in India
Key Takeaways
- The Central Government has exempted eligible IFSC GIFT City units from the licensing requirement under Section 11 of the Coastal Shipping Act, 2025 for specified foreign vessel chartering activities.
- The notification has been issued under Section 37 of the Coastal Shipping Act, 2025 and came into force with immediate effect.
- The reform is intended to strengthen GIFT City as India’s maritime leasing, financing and international maritime services hub.
- The notification does not amend India’s cabotage framework or expressly address the Right of First Refusal (RoFR).
- Industry stakeholders have sought clarity on the implications of the exemption for domestic fleet owners and existing RoFR practices.
- The reform represents another step in India’s strategy to develop a globally competitive maritime financial ecosystem alongside its port-led development agenda.
India has taken another significant step towards strengthening its maritime financial services ecosystem by exempting eligible International Financial Services Centre (IFSC) units in GIFT City from the licensing requirement under Section 11 of the Coastal Shipping Act, 2025. The reform aims to simplify foreign vessel chartering for international and EXIM trade, enhance maritime leasing and ship financing, and position GIFT City as a globally competitive maritime services hub. While the notification leaves India’s cabotage framework unchanged, it has also prompted industry discussions over its interaction with the Right of First Refusal (RoFR) framework for domestic fleet owners.
For more than a decade, policy attention has largely focused on expanding ports, modernising logistics infrastructure, improving coastal connectivity and strengthening maritime governance. The latest notification issued under the Coastal Shipping Act, 2025 reflects a broader ambition—developing India as a global centre for maritime financial and commercial services.
Through Gazette Notification S.O. 3690(E), dated 7 July 2026, issued under Section 37 of the Coastal Shipping Act, 2025, the Central Government has exempted eligible IFSC GIFT City units from obtaining licences under Section 11 for chartering foreign vessels for specified international and EXIM trade operations. The Government says the reform will improve ease of doing business, attract global maritime investment and strengthen ship leasing, financing and related maritime services.
Beyond its immediate regulatory impact, the notification illustrates India’s attempt to shift from being primarily a maritime infrastructure economy to becoming a comprehensive maritime services economy. At the same time, sections of the domestic shipping industry have sought clarification on how the exemption may interact with existing cargo support mechanisms such as the Right of First Refusal (RoFR), highlighting the importance of implementation clarity alongside regulatory reform.
India Expands Maritime Reforms Beyond Ports into Maritime Finance
India has taken another policy step towards transforming itself from a nation primarily focused on maritime infrastructure into one seeking a greater role in global maritime services.
The latest reform does not involve the construction of a new port, expansion of shipping capacity or launch of a maritime infrastructure project. Instead, it focuses on the regulatory environment governing maritime business—specifically, the ease with which eligible entities operating from the International Financial Services Centre (IFSC) at Gujarat International Finance Tec-City (GIFT City) can charter foreign vessels for international and export-import trade.
The legal basis for the reform is contained in Gazette Notification S.O. 3690(E), dated 7 July 2026, through which the Central Government exercised its powers under Section 37 of the Coastal Shipping Act, 2025 to exempt foreign vessels chartered by eligible IFSC units from the licensing requirement prescribed under Section 11 of the Act.
Although the Gazette notification itself is concise, the policy objective behind the decision is broader. According to the Ministry of Ports, Shipping and Waterways, the exemption is expected to strengthen India’s maritime leasing and financing ecosystem, encourage maritime investment and support the development of GIFT City as an internationally competitive maritime services centre.
What Exactly Has the Government Changed?
The notification introduces a targeted regulatory exemption, not a comprehensive restructuring of India’s coastal shipping framework.
Before the notification, activities falling within the scope of Section 11 required eligible entities to obtain a licence from the maritime administration before chartering foreign vessels for the specified operations.
Under the new exemption, eligible units established in the IFSC at GIFT City are no longer required to obtain that licence for chartering foreign vessels for international and EXIM trade activities covered by the notification.
Importantly, the exemption is limited in scope.
It does not rewrite the Coastal Shipping Act, 2025. Nor does it replace the wider regulatory framework governing coastal shipping. Rather, it removes one specific licensing requirement for a defined category of entities operating within India’s international financial services ecosystem.
By simplifying this regulatory process, the Government expects to make GIFT City more attractive for ship leasing companies, maritime financiers, global chartering businesses and other maritime service providers seeking an internationally competitive operating environment.
Why GIFT City Is Central to India’s Maritime Strategy
The significance of the notification extends well beyond licensing.
Globally, leading maritime centres derive substantial economic value not only from ports and shipping operations but also from high-value maritime services such as ship leasing, marine insurance, vessel financing, chartering, legal advisory, arbitration and maritime asset management.
Jurisdictions including Singapore, London and Dubai have successfully developed ecosystems where shipping companies, financial institutions and maritime service providers operate within integrated regulatory and financial frameworks.
India has been seeking to establish a similar ecosystem through GIFT City, which was created to serve as the country’s premier International Financial Services Centre.
Within this vision, maritime finance represents an important pillar. Encouraging ship-owning structures, leasing companies and maritime investment vehicles to operate from GIFT City enables India to participate more actively in the financial dimensions of global shipping rather than remaining primarily a provider of cargo, ports and logistics infrastructure.
The latest exemption should therefore be viewed as part of a wider policy effort to improve the ease of doing business for maritime enterprises operating through India’s international financial services jurisdiction.
Understanding the Law: What Sections 11 and 37 Mean
At the centre of the latest reform are two provisions of the Coastal Shipping Act, 2025—Section 11 and Section 37. Understanding their respective roles is essential to appreciating both the scope and the limits of the Government’s notification.
Section 11 establishes the statutory requirement relating to the licensing of foreign vessels for specified operations under the Act. It forms part of the regulatory framework governing the participation of foreign vessels in activities covered by the legislation and serves as a mechanism through which the maritime administration oversees such operations.
Section 37, on the other hand, empowers the Central Government to exempt any foreign vessel or class of foreign vessels from the operation of the Act or specified provisions, subject to conditions it considers appropriate.
By exercising its powers under Section 37, the Government has not amended or repealed Section 11. Instead, it has granted a targeted exemption for a defined category of entities—eligible units established in the International Financial Services Centre (IFSC) at GIFT City.
This distinction is important from both a legal and policy perspective.
The notification creates an exemption from a licensing requirement; it does not rewrite the legislative framework governing coastal shipping.
MaritimeNews Knowledge Box
Understanding the Notification
| Question | Answer |
|---|---|
| What has changed? | Eligible IFSC GIFT City units no longer require a licence under Section 11 for the notified activities. |
| What is the legal basis? | Section 37 of the Coastal Shipping Act, 2025. |
| Who benefits? | Eligible units operating from IFSC GIFT City engaged in foreign vessel chartering for international and EXIM trade. |
| When did it come into force? | Immediately upon publication of the Gazette Notification. |
| Does it amend the Act? | No. It provides a statutory exemption under powers already available to the Government. |
What the Notification Does Not Change
One of the strengths of the Gazette Notification is its precision.
Equally important, however, is understanding what it does not attempt to regulate.
The notification does not:
- amend India’s cabotage policy;
- modify the broader Coastal Shipping Act, 2025;
- prescribe a new framework for Indian-flag registration;
- alter coastal trade safeguards;
- introduce changes to taxation applicable to maritime entities; or
- expressly refer to the Right of First Refusal (RoFR).
This distinction is critical because public debate surrounding the notification has extended beyond the actual text of the Gazette.
For readers and industry participants alike, separating the legal effect of the notification from subsequent interpretations is essential to understanding its practical implications.
The RoFR Debate: Why Industry Is Seeking Clarity
While the Government has presented the notification as a measure to improve ease of doing business and strengthen India’s maritime finance ecosystem, sections of the domestic shipping industry have focused on another aspect—the absence of any explicit reference to the Right of First Refusal (RoFR).
According to industry views reported by ET Infra, representatives of domestic fleet owners had expected the notification to clarify that existing RoFR protections would continue to apply even after the licensing exemption. They argue that the absence of such language has created uncertainty regarding the competitive position of Indian-flag operators in certain chartering arrangements.
Some stakeholders have expressed concern that IFSC-based entities could gain operational flexibility that may influence chartering decisions, while others fear that the exemption could encourage more commercial activity to shift from the Domestic Tariff Area (DTA) to GIFT City.
However, other chartering professionals quoted in the same report have taken a more measured view, suggesting that the practical application of RoFR will continue to depend on the legal structure of individual transactions and the status of the contracting entities. They argue that existing procurement and licensing requirements applicable to DTA entities may still preserve RoFR protections in many circumstances.
At present, these are stakeholder interpretations. The Gazette Notification itself neither abolishes nor modifies RoFR.
MaritimeNews Fact Check
| Statement | Status |
|---|---|
| IFSC GIFT City units receive an exemption from Section 11 licensing requirements. | ✅ Confirmed by the Gazette Notification. |
| The notification amends the Coastal Shipping Act, 2025. | ❌ Incorrect. It grants an exemption under Section 37. |
| India’s cabotage regime has been changed. | ❌ Incorrect. The notification does not alter cabotage provisions. |
| RoFR has been abolished. | ❌ Not supported by the Gazette. The notification is silent on RoFR. |
| The reform is intended to support maritime leasing and financial services through GIFT City. | ✅ Confirmed by the Government’s policy explanation. |
Why This Reform Matters for India’s Maritime Future
The notification should be viewed as part of a broader transformation in India’s maritime policy.
Historically, the country’s maritime agenda concentrated on physical infrastructure—ports, terminals, inland waterways and logistics corridors. More recently, however, policy has begun expanding into maritime services, recognising that global shipping is supported not only by ships and ports but also by financing, insurance, leasing, legal services, arbitration and asset management.
Developing GIFT City as a maritime financial centre aligns with this shift.
If successful, the initiative could encourage more ship leasing companies, financial institutions and maritime service providers to establish operations in India, reducing reliance on overseas jurisdictions for maritime finance and commercial shipping services.
At the same time, regulatory reforms that enhance international competitiveness must also maintain confidence among domestic maritime stakeholders. The debate surrounding RoFR illustrates the need for clear communication and, where necessary, further implementation guidance to minimise uncertainty.
What Happens Next?
The notification is already in force, but its long-term impact will depend on implementation and market response.
Key developments to watch include:
- Whether additional guidance is issued on the interaction between the licensing exemption and existing RoFR practices.
- The extent to which international ship leasing and maritime finance companies establish operations in GIFT City.
- Whether Indian shipping companies expand their use of IFSC structures.
- How the reform influences investment in ship ownership, financing and chartering within India.
- Whether complementary fiscal or regulatory measures are introduced to further strengthen India’s maritime services ecosystem.
The answers to these questions will shape the next phase of India’s ambition to become a globally competitive maritime nation.
What Government & Stakeholders Should Watch
The notification represents a progressive regulatory reform, but its success will depend on careful implementation and continued stakeholder engagement.
For Government
- Provide implementation clarity wherever operational ambiguity arises.
- Continue harmonising maritime finance, taxation and shipping regulations.
- Monitor the reform’s impact on India’s maritime competitiveness.
For Domestic Shipowners
- Evaluate how GIFT City structures may influence future business models.
- Engage with policymakers through evidence-based consultations where clarification is required.
For Maritime Investors
- Assess opportunities in ship leasing, financing and related maritime services within IFSC GIFT City.
For Regulators
- Ensure that ease-of-doing-business initiatives remain balanced with broader policy objectives, including strengthening India’s maritime capabilities and maintaining a predictable regulatory environment.
MaritimeNews Insight
The significance of this notification extends beyond the licensing exemption itself.
It reflects a strategic evolution in India’s maritime policy—from building ports and expanding shipping infrastructure to creating an integrated maritime business ecosystem capable of competing internationally.
Whether this objective is fully realised will depend on more than regulatory simplification. Success will require complementary reforms in taxation, ship financing, maritime insurance, legal services, dispute resolution, talent development and ship registration.
Equally important will be maintaining confidence among existing domestic stakeholders while attracting new international investment.
Viewed in that context, the notification is best understood not as an isolated regulatory change, but as another milestone in India’s long-term effort to establish itself as a global maritime services hub.
Frequently Asked Questions (FAQ)
1. What has the Government announced?
The Central Government has exempted eligible units established in the International Financial Services Centre (IFSC) at GIFT City from obtaining a licence under Section 11 of the Coastal Shipping Act, 2025 for chartering foreign vessels for specified international and EXIM trade operations.
2. Under which legal provision has the exemption been granted?
The exemption has been issued through Gazette Notification S.O. 3690(E), dated 7 July 2026, under the powers conferred by Section 37 of the Coastal Shipping Act, 2025.
3. Who benefits from this exemption?
The exemption applies to eligible maritime entities operating from IFSC GIFT City, including businesses involved in ship leasing, ship financing, chartering and other maritime financial services.
4. Does this notification change India’s cabotage policy?
No.
The Gazette Notification does not amend India’s cabotage regime. The official Government communication also states that the existing coastal trade safeguards remain unchanged.
5. Has the Right of First Refusal (RoFR) been abolished?
No.
The Gazette Notification does not expressly discuss RoFR.
Industry stakeholders have sought clarification regarding its practical interaction with the licensing exemption, but the notification itself neither abolishes nor modifies the RoFR framework.
6. Why is GIFT City important for the maritime sector?
GIFT City is India’s International Financial Services Centre (IFSC).
The Government is developing it as a hub for:
- Ship leasing
- Maritime finance
- Marine insurance
- Chartering
- Maritime asset management
- International maritime business
The objective is to bring more global maritime financial activities to India.
7. Why is this reform strategically important?
The reform represents a shift in India’s maritime policy from focusing solely on ports and shipping infrastructure to developing a comprehensive maritime services ecosystem that includes finance, leasing, insurance and investment.
8. What should the industry watch next?
Stakeholders should monitor:
- Additional implementation guidelines.
- Clarifications regarding RoFR.
- Growth of ship leasing activities in GIFT City.
- New maritime financial institutions entering India.
- Future amendments under the Coastal Shipping Act, 2025.
