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Indian Shipping Firms can own Foreign Flag Vessels Directly
Jul 30, 2014

The Centre has taken a policy decision to allow shipping enterprises based in India to acquire ships abroad and flag them in the country of their convenience. This decision is aimed at encouraging Indian shipping companies to have their registered offices in India and acquire further tonnage/ ships without forming subsidiaries out of India to own foreign flag vessels.

These companies register their ships abroad without actually opening their registered office or a subsidiary company there. This will enable Indian companies to have access to cheaper sources of funds abroad to acquire additional tonnage while not having to set up multiple enterprises abroad to acquire and maintain such tonnage.

The policy, however, prescribes that the additional tonnage that can be acquired and flagged abroad by these India-based enterprises is limited to the tonnage of the Indian flagged ships already registered by them in India. The additional tonnage that can be acquired abroad is also subject to employment of certain proportion of Indian crew thereby creating additional employment opportunities for Indian seafarers.

The Government exchequer is expected to gain from this policy decision through tax on the revenues earned from operations of this additional tonnage rather than through dividends from such subsidiaries based abroad.


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