Centre Exempts GIFT City IFSC Units from Coastal Shipping Licence Requirement for Chartering Foreign Vessels

What was decided

The government has exempted units established in the International Financial Services Centre (IFSC), GIFT City, Gandhinagar, from the licensing requirement under Section 11 of the Coastal Shipping Act, 2025, for chartering foreign vessels for EXIM and international trade operations. The exemption, notified by the Ministry of Ports, Shipping and Waterways on July 10, 2026, removes the requirement for eligible International Financial Services Centre (IFSC) units to seek approval from the Director General of Shipping for operations covered under Section 11 of the Act. The move takes effect immediately.

Legal basis and scope

The exemption is issued under the Coastal Shipping Act, 2025 — the law that replaces Part XIV of the Merchant Shipping Act, 1958 with a new-age, progressive legislation aligned with global cabotage norms. Under that Act, foreign vessels chartered for certain operations otherwise require a licence from the Director General of Shipping. The International Financial Services Centre will have the meaning assigned to it under Clause (g) of Sub-section (1) of Section 3 of the International Financial Services Centres Authority Act, 2019, which is the statutory definition the notification uses to identify who qualifies for the carve-out.

The exemption removes the requirement for eligible IFSC units to obtain a licence from the Director General of Shipping for chartering foreign vessels for operations covered under Section 11. The exemption is limited to the licensing requirement under Section 11 of the Coastal Shipping Act and does not alter the existing framework governing coastal trade.

What stays the same

The exemption applies only to international EXIM operations and does not touch India's cabotage regime, meaning the existing rules protecting Indian vessels' exclusive right to ply coastal routes remain untouched. The prevailing cabotage regime and safeguards applicable to coastal shipping remain unchanged, while regulatory flexibility has been provided for EXIM and international trade operations. In other words, an IFSC unit at GIFT City chartering a foreign-flagged vessel to move cargo between two Indian ports would still fall under the ordinary licensing regime; the relief applies specifically to chartering for cross-border trade.

Practical effect for GIFT City

The measure is also expected to facilitate greater participation of global capital in maritime assets, encourage the establishment of ship-owning and leasing structures in India, and accelerate the development of a comprehensive maritime ecosystem encompassing ship leasing, financing, asset management and other value-added maritime services. By simplifying the regulatory framework governing the chartering of foreign vessels for international shipping operations, it is expected to encourage maritime leasing, ship financing and ship-owning activities through GIFT City while fostering a globally competitive business environment for maritime enterprises.

For an IFSC-registered ship-leasing or ship-financing entity, this means one fewer regulatory approval step — the DG Shipping licence under Section 11 — when structuring a charter for a foreign trade vessel. The notification does not create new tax breaks or capital incentives; it removes a procedural licensing gate.

Why now: the ship-leasing build-up at GIFT City

The reform is expected to accelerate ship leasing and financing activity that has been steadily building at GIFT City since the International Financial Services Centres Authority (IFSCA) first notified ship leasing as a recognised financial product in January 2022. By March 2025, ship leasing activity at the hub had already quadrupled year-on-year, with 17 vessels leased and over $71.1 million borrowed to support operations, according to IFSCA. GIFT City separately built up a broader financial ecosystem, including a treasury loan book worth $5.61 billion and banking assets of $111 billion, as it reinforced its ambitions as a top-tier financial centre in Asia.

Industry researchers noted that reducing regulatory friction for ship leasing and financing structures is key for attracting global maritime capital, a principle reflected in reforms undertaken by established hubs such as Singapore and Dubai.

Official statements

The Ministry of Ports, Shipping and Waterways said the move was a major policy initiative aimed at strengthening the maritime services ecosystem and enhancing the country's competitiveness in global shipping. Union Minister for Ports, Shipping and Waterways Sarbananda Sonowal framed it as part of a wider reform push, saying "The last 12 years under the visionary leadership of Hon'ble Prime Minister Shri Narendra Modi ji have transformed India's maritime sector through landmark reforms, world-class infrastructure and unprecedented policy support. We have laid a strong foundation," and adding that "the next phase is to unlock the full potential of maritime industry by minimal governance to enhance competitiveness."

Broader legal context: the Coastal Shipping Act, 2025

The exemption is issued under a relatively new statute. The Coastal Shipping Act, 2025, which was passed by the Indian Parliament and received the President's assent on August 9, 2025, aims to consolidate and amend laws governing coastal shipping, encourage domestic participation in the coasting trade, and ensure that India possesses a coastal fleet owned and operated by its citizens. This progressive legislation replaces Part XIV of the Merchant Shipping Act, 1958, aligning India's maritime legal framework with global standards. The GIFT City exemption is a targeted carve-out within this newer framework, applied specifically to IFSC-based charter operations for international trade rather than coastal cargo movement.