Brief Overview:
The International Financial Services Centres Authority (“IFSCA”) has amended the ‘Framework for Ship Leasing’ dated 16th August 2022 (“Framework”) and the circular no. F No 496/IFSCA/FC/SLF/2024-25/02 on ‘Additional requirements for carrying out the permissible activities by Finance Company as a Lessor under ‘Framework for Ship Leasing’’ dated 8th May 2024 (“Circular”) vide its notification dated 7th April 2025 (“Amendment”).
Technical Details:
The Amendment has introduced the following changes to the Framework and the Circular:
1) Lessors can now raise invoices and receive payments for permissible activities in any foreign currency permitted under the IFSCA (Banking Regulations) 2020.
2) Additionally, lessors are now permitted to open SNRR accounts with authorised dealers outside the internal financial services centre (“IFSC”) under the Foreign Exchange Management (Deposit) Regulations, 2016 for its business-related transactions outside IFSC.
3) The Amendment further amends the Circular and imposes restriction on ship leasing transactions that involve transferring (in any form) ownership or leasehold rights of a ship / ocean vessel from Indian residents to entities set-up in IFSC solely for serving Indian residents. Ships / ocean vessels which have been newly acquired from an Indian shipyard are exempt from this restriction.
Key Takeaways:
The Amendment is a welcome move as it enhances currency flexibility for lessors engaging in ship leasing business in IFSCs and also clarifies transaction rules as regards entering into transactions solely for serving Indian residents.
For further details, please see:
Amendment to the ‘Framework for Ship Leasing’ and relevant circulars
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