Prelims level : Economics (National) Mains level : Issues Related to planning
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Why in News:

  • Indian shipping companies have submitted a memorandum to the Prime Minister, seeking his immediate intervention of scraping a recent notification and a circular, would force shipping companies to shut down and results in heavy job losses.


  • They said the Indian flag shipping industry was heading for a crisis arising out of Notification No. 2 of ‘Make in India’ dated February 13, 2019, issued by the Ministry of Shipping, and Circular No. 2 of 2019 issued by the Director General of Shipping, Mumbai. These changes would take away business from the Indian shipping companies.
  • The circular equates a foreign ship taken on hire, with a ship actually owned under the Indian flag by an Indian company.
  • It gives priority in government contracts to those ships, just because they were once built in India.

Advantage Foreign firms:

  • Indian flag vessels have been enjoying the Right of First Refusal (ROF) which enables them to match the lowest rates quoted by a foreign vessel and take that business. This has aided growth of the Indian fleet since it helps to ensure that no Indian asset remains idle. Indian ship owners said this right has been taken away by the government and given to foreign shipping companies.
  • It removes the Right of First Refusal (ROFR) available to the Indian flag vessels which enables an Indian flag vessel to match the lower rates given by a foreign flag vessel so that the Indian business is available to Indian flag vessels.
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