Indian Government plans strict age restrictions on cargo vessels

India’s government is preparing to impose a set of vessel age restrictions on all ships handling Indian cargo.

The restrictions would prevent Indian owners from buying and registering any ship over 20 years of age and would generally require deregistration after 25 years. Passenger vessels would be exempt.

The details according to type of vessel are as follows:

Second-hand tankers aged 20 years or more cannot be acquired.

There will be a deletion from the registry of all tanker of 25 years age.

There is no relaxation for bunker barges (RSV/ICV).

Second-hand bulker/general cargo vessels aged 20 years or more cannot be acquired.

All vessels that reach 25 years of age or which are already that age will be deleted.

There is relaxation for MBC, special type vessels such as RoRo etc.

Second hand ships in the offshore fleet cannot be acquitted if they are aged 20 years or more.

Except for DP, all vessels will be deregistered upon attaining an age of 25 years.

All such vessels will be deregistered when they reach 30 years age.

For specialized vessels(Diving support, Geo-technical, pipe laying, seismic survey, well simulation etc), there will be no second-hand acquisition allowed of vessels aged 20 years or more. There will be automatic deregistration at the age of 30 years.

For fully cellular container vessels, gas carriers, harbour tugs, no second-hand acquisition of vessels aged 20 years or more. Automatic deregistration on reaching an age of 30 years.

For AHTS and tugs involved in long tow, no second-hand acquisition of vessels aged 20 years or more. All existing AHTS/Tow tugs will be deregistered at 25 years of age.

For dredgers, no second-hand acquisition will be allowed of vessels aged 15 years or more. Class inspection/survey, automatic deregistration when age reaches 30 years.

Fornon-self-propelled ocean-going cargo carrying barges and for any other vessel not listed above, there will be automatic deregistration at an age of 25 years

The age of the vessel shall be computed from the “Date of Build” as mentioned in the Certificate of Registry.

Similar restrictions will be applied to foreign-flag tonnage when engaged in handling “EXIM/coastal cargo” at Indian ports or providing maritime services in the Indian EEZ. In addition, any foreign ship competing for Indian cargo would have to be less than 20 years old.

For foreign-flagged ships, “an Indian entity acquiring a ship will not be able to register the ship after it turns 20 years of age. Further, if a foreign entity is allowed to compete for an Indian cargo (FOB or CIF or delivered basis), such a ship under that entity must not be older than 20 years of age.”

India’s director general of shipping said that there was “a need to create a level playing field for Indian ships by applying the requirements for quality tonnage over foreign flagged vessels calling into Indian ports or Indian offshore facilities, for carrying Indian cargo or for providing services in Indian EEZ/Offshore area.”

The Merchant Shipping Act, 1958, is currently under review.

If all of this comes into law, the impact on Indian shipowners remains to be calculated, but could be significant. For example, if a 25-year hard limit were applied to the US coastwise merchant fleet, it would lose approaching 25% of its fleet.

Reporting on the new rules, India’s Economic Times said that the move by the Indian government appeared to be targeting government-subsidized shipping.

The report said that Indian-flagged vessels were eligible for a subsidy of between 5% and 15% of their charter rates when they move cargoes for India’s state-owned enterprises. Charterers were reported to be exploiting the subsidy by favouring cheaper, older tonnage which had led to a reduction in average vessel quality.

“There is a need for review and to specify certain requirements to enable registration/operation of quality tonnage under the Indian flag,” the Directorate General of Shipping explained in its introduction to the new rules.

However, it was observed that the new proposed rules could have unintended side-effects. Indian owners have been buying older tanker tonnage over the past year, possibly eyeing new opportunities for the transfer of crude oil from Russia to new markets. According to VesselsValue, one new firm grew from zero ships to 25 aging ships in nine months, including nine tankers added in the month of December alone.

It was also observed that one beneficiary from what could be a surge in scrappings would be the shipbreaking industry in Alang, India.