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Ship Leasing Units in IFSC: Sharing of Office Space Allowed

An amendment to the Special Economic Zones Rules, 2006, has been notified by the Ministry of Commerce and Industry, allowing the sharing of office space and/ or manpower by units undertaking ship leasing activities in the International Financial Services Centre (IFSC).

The term ‘ship lease’, which includes an operating lease and a hybrid of operating and financial lease, of a ship or ocean vessel, engines of a ship or ocean vessel, or any other part thereof, was notified in January 2022, as a financial product under the  International Financial Services Centres Authority Act, 2019. The framework for ship leasing was then released to facilitate the business of ship leasing in the IFSC.

Under the 2024 amendment, changes have been made to Rule 21B of the SEZ Rules. Accordingly, if the IFSCA permits an IFSC unit authorised to undertake aircraft or ship leasing activity to not maintain a separate office, the said unit may share the office space and/ or manpower with another IFSC unit authorised to undertake aircraft or ship leasing activity.

This particular rule was incorporated in the 2006 Rules in February of last year when it was applicable to only aircraft leasing. In the case of aircraft leasing, the guidelines with respect to application seeking approval (for sharing resources) were released by the IFSCA two months later. Notably, the guidelines state that the existing unit can make an application seeking permission to share resources with the proposed group entity. I.e., a) the application has to be preferred prior to the group entity’s incorporation, and b) the relationship with the proposed entity should be within the definition of ‘group entity’. However, with respect to ship leasing, fresh guidelines on obtaining approval are expected to be issued soon.

Date: March 15, 2024