Reliance Industries’ (RIL) arm
is all set to establish a ship leasing entity at IFSC – GIFT city in Gujarat.
The total investment and expenses will be to the tune of ₹22,033 crore.
Reliance International Leasing IFSC has proposed to set up the leasing entity
in GIFT IFSC. The setting up of the shop
is subject to the SEZ committee’s approval.
The proposal made to GIFT SEZ
Authority is “for approvals to set up a ship leasing firm to carry on the
business of Operating Lease of ships, vessels and voyage charters,” sources
said.
The company has named three
directors including Hitesh Kumar Sethia, who is the President and CEO of Jio
Financial Services Ltd; Amit Mehta, who has been with RIL for the past 20
years, is the SVP and Head Gases at the conglomerate, and Jayesh Biharilal
Dholakia, who is an AGM in RIL.
Speaking about the
source of finances, Reliance has reportedly maintained that the promoter and
investors will invest the capital from financial liabilities and internal
accruals. The promoter and investors will invest ₹5 crore capital from financial
liabilities, ₹11,607 crore and balance ₹13.26 crore from internal accruals,
according to information reviewed by businessline.
“Reliance has approached
International Financial Services Centres Authority (IFSCA )for approvals to set
up a ship leasing firm to carry on the business of Operating Lease of ships,
vessels and voyage charters,” a source said. On the financial aspect, the
information reviewed show that the, “Free on Board (FOB) value for the export
of services for a five-year-period is projected at ₹10,780.41 crore (₹2,156
crore per annum). The foreign exchange outgo is ₹10,397 crore, resulting in a
Net Foreign Exchange (NFE) of ₹383 crore.” “IFSC Authority has received
application from Reliance International Leasing IFSC Ltd,” said Dipesh Shah,
Executive Director (Development), IFSCA. “We are seeing great interest from
institutions to set up ship leasing business from GIFT IFSC. Currently, at
IFSC, we have authorised seven entities and three in-principle approvals. Already three ships have been leased into
India from IFSC,” he added.
A total of 35 people will be
employed with a NFE of ₹38,330 crore in five years.
Ship leasing is the latest
addition to the gamut of activities permitted by the regulatory authority IFSC
at GIFT city.
Incidentally, Ripley Shipping
India IFSC Private Ltd was the first company to lease a vessel from the GIFT
city. The company received a certificate of registration from IFSCA in March
2023 to operate in GIFT city. MV Ripley Pride is a bulk carrier (Panamax) that
was built in 2003 in Japan with a carrying capacity of about 76,858 deadweight
tonne (DWT).
Currently, only Indian flag
ships are allowed in IFSC-GIFT city (like in the Domestic Tariff Area) because
it comes under the Merchant Shipping Act, 1958. As of October 2023, India stands 16th in the global list of the largest
maritime countries, with a coastline spread across 7,517 km and 205 minor
ports. Despite an enabling landscape, Indian companies continue to
associate with foreign entities for freight agreements, in an attempt to ship
their cargo.
Globally, ship
leasing is considered a popular trading tool and is leveraged across the
manifold segments of the shipping industry including containers,
dry bulk, tankers, etc.
As of April 2023, the global
charter hire market was estimated at $100 billion.