As has been the case with cargo ships that are subject to re-importation into India, the Reserve Bank of India (RBI) has modified the Foreign Exchange Management (Export of Goods & Services) Regulations to exempt tugboats, dredgers, and offshore support vessels from the need to submit an Export Declaration Form (EDF). In a related move, the Central Bank increased the maximum advance remittance amount for ship imports from $5 million to $50 million, eliminating the need for a standby letter of credit or bank guarantee. This puts ships on par with the aviation industry in terms of financial convenience.
These reforms directly respond to the long-standing concerns of Indian shipowners and maritime service providers, which were pursued by the Directorate General of Shipping, and demonstrate a shift toward ease of doing business in the shipping sector.
It reflects India’s readiness to welcome global players seeking to base their maritime operations here, backed by regulatory clarity, policy momentum, and our strategic aim in global trade. The FEMA Regulation mandated filing of Export Declaration Form (EDF) before non-cargo ships departed Indian waters, which took about 15 days. Previously, only cargo ships were exempted from this rule but with the notification issued in June, non-cargo ships can also be mobilised worldwide.
This was the main reason why foreign dredging companies were reluctant to base their assets under the Indian flag. The RBI notification removes a procedural nuisance. We have been asking for this for almost ten years which is relevant for the offshore vessel segment.
RBI’s decision to raise the limit of advance remittance is aimed at facilitating the local shipping industry “If we are buying a ship in the second-hand market, we would have to pay a deposit of 10-20 per cent. That could not cross $5 million earlier, now we can go up to $50 million. For instance, when we buy a ship for $60 million and the seller wants a 20 per cent deposit, we would have to negotiate separately for a lower deposit requirement, which made us less competitive,” the ship owner added.
