Ship leasing in GIFT IFSC is often described as the maritime counterpart of aircraft leasing (Article 41). The regulatory architecture is indeed similar, and deliberately so. But the two differ in one respect that matters commercially: aircraft financing in India now rests on implemented treaty law with a statutory repossession machinery (Article 42), whereas ships remain governed by the general shipping and admiralty statutes, which were themselves rewritten in 2025.

Bringing Ship Lease inside The Perimeter

The Ministry of Finance notified, by S.O. 5199(E) dated 14 December 2021, operating leases and hybrids of such products or equipment as IFSCA may specify. Exercising that power under section 12 of the IFSCA Act, IFSCA notified, on 7 January 2022, “ship lease” — operating lease and hybrid of operating and financial lease of a ship or ocean vessel, its engines or any part — as a financial product under section 3(1)(d).

The definitions in the framework are wider than the word “ship” suggests. “Ocean vessel” covers every description of watercraft used or capable of use in the marine environment, including boats, submersibles and semi-submersibles, hydrofoils, non-displacement and amphibious craft, barges, lighters and Mobile Offshore Drilling Units, and extends to inland water vessels and coasting vessels. Fishing and sailing watercraft are excluded from both “ship” and “ocean vessel”. Offshore energy support assets therefore sit inside the regime.

Two Regimes in One Framework

The Framework for Ship Leasing (circular dated 16 August 2022, updated to 20 May 2026) is structured in two parts, following the classification under the IFSCA (Finance Company) Regulations, 2021:

Application and registration fees are USD 1,000 and USD 12,500 in both cases, and IFSCA may require additional capital as a risk-management measure. An entity already registered for operating leases must apply separately if it wishes to undertake financial leases or hybrids.

Legal form. The applicant may be a company, an LLP, a trust or a branch — including a branch of a wholly owned subsidiary of the IFSC-registered entity — which is a wider menu than the aircraft framework offers. Promoters, partners or trustees must be located in a FATF-compliant jurisdiction.

Permissible activities under Part I extend beyond leasing to voyage charters, contracts of affreightment, employment in shipping pools and other commercial transactions for the employment of ships — but only where the lessor holds absolute or leasehold right over the vessel. Asset management support services may be provided for assets owned or leased out by the lessor or its group entities in IFSCs, and sale and leaseback, purchase, novation, transfer and assignment are permitted. Whether a transaction is a lease is determined by Ind AS 116.

Currency and accounts. Invoices are raised in a currency specified in the First Schedule to the IFSCA (Banking) Regulations, 2020, and payment is received in a foreign currency account with an IFSC Banking Unit. For business transactions outside the IFSC, the lessor may open a special non-resident rupee account with an authorised dealer in India under Schedule 4 of the Foreign Exchange Management (Deposit) Regulations, 2016.

The Anti-Relocation Condition

Clause O.1, inserted on 8 May 2024 and amended on 7 April 2025, is the provision most likely to defeat a proposed structure. A lessor may not undertake a transaction involving transfer, in any form, of ownership or leasehold right of a ship or ocean vessel from a person resident in India to an IFSC entity for the purpose of providing services solely to a person resident in India in any single financial year. Two provisos preserve genuine expansion: acquiring a new vessel or entering a new leasehold contract with a person resident outside India in order to serve Indian customers, and acquiring a new vessel from a shipyard in India.

IFSCA’s FAQs of 23 July 2024 work this through. An Indian-owned vessel serving Indian clients, moved into an IFSC lessor to serve Indian clients only, is not permitted. An Indian shipping business setting up in the IFSC to pursue global operations or foreign contracts is permitted. A vessel acquired from outside India even solely to serve Indian clients is permitted, as is a newly built vessel bought from any shipyard, Indian or foreign. Critically, the FAQs state that an existing business or contract with Indian residents cannot be shifted into the IFSC, though new compliant contracts may be routed through the lessor once the existing contract concludes.

The Shipping-Law Layer

Clause C(ii) of the framework requires compliance with the statutes governing shipping and with instruments issued by the Director General of Shipping. That layer changed in 2025. The Merchant Shipping Act, 2025 (Act 24 of 2025), which received assent on 18 August 2025, consolidates and replaces the earlier law. Two provisions matter to a lessor:

• Section 15 sets who may own an Indian vessel — a citizen of India including a non-resident Indian or Overseas Citizen of India; a company or body established under a Central or State Act with its registered office or principal place of business in India; or such other person or body as the Central Government may notify — with the proportion of ownership itself left to notification.
• Section 16 permits a foreign vessel chartered by an Indian charterer on a bareboat charter-cum-demise contract to be registered, subject to prescribed conditions.

The Act came into force on 15 March 2026 under S.O. 1244(E) dated 10 March 2026, and rules under it have been notified through 2026, including the Merchant Shipping (Registration of Vessels) Rules, 2026. The framework circular, however, still refers to the Merchant Shipping Act, 1958. That is a drafting lag rather than a substantive divergence, but it means the operative shipping-law requirements must be taken from the current statute and rules, not from the circular’s citation.

Enforcement against a vessel remains a matter for admiralty jurisdiction. There is no maritime equivalent of the Cape Town regime; a lessor’s principal in rem remedy is arrest under the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017, exercised by High Courts with admiralty jurisdiction.

The Tax Position

Under the Income-tax Act, 2025, ships are treated alongside aircraft. Section 147(3)(d) brings within the deduction income from the transfer of an asset being a ship leased by an IFSC unit which commenced operations by 31 March 2030. Schedule VI exempts, in the hands of a non-resident, royalty or interest on the lease of a ship paid by such a unit (Sl. No. 6); capital gains on shares of a domestic company that is an IFSC unit primarily engaged in ship leasing, for ten tax years (Sl. No. 8); and dividends from such a unit received by another IFSC Unit (Sl. No. 11). “Ship” is defined for these entries to include an ocean vessel, its engine or any part (Articles 5 and 7).

Points to Settle before Applying

• Classify the transaction as operating or financial lease under Ind AS 116; the capital requirement differs fifteenfold.
• Test clause O.1 vessel by vessel and year by year, since the restriction is framed by reference to a single financial year.
• Do not plan on migrating an existing Indian contract. The FAQs close that route expressly.
• Check the current shipping statute and rules, not the circular’s reference to the 1958 Act, for registration, flag and ownership questions.
• Diarise the 31 March 2030 commencement condition on which several tax entries depend.

Update to 15 October 2026

IFSCA issued a consultation on 13 August 2026 on a consolidated framework for leasing activity in the IFSC (Article 41). Any final framework may also bear on ship leasing. The existing framework circular remains operative until a final framework is issued; as at 15 October 2026 none had been.

Frequently Asked Questions

1. What is ship leasing in GIFT IFSC?

Ship leasing in GIFT IFSC allows registered entities to lease ships, ocean vessels, engines and related equipment under IFSCA’s regulatory framework.

2. What is the minimum capital requirement for ship leasing?

Operating lease activities require a minimum owned fund of USD 200,000, while financial leases and hybrids require USD 3 million.

3. Can an Indian ship be transferred to a GIFT IFSC lessor?

Restrictions apply where a vessel is transferred from an Indian resident to an IFSC entity to serve only Indian residents in a financial year, subject to specified exceptions.

4. What tax benefits are available for ship leasing in GIFT IFSC?

Eligible units may claim deductions under Section 147 of the Income-tax Act, 2025, and benefit from specified exemptions under Schedule VI, subject to applicable conditions.

5. Which laws govern ship leasing in GIFT IFSC?

Ship leasing is governed by IFSCA’s Ship Leasing Framework, the applicable Finance Company Regulations, the Merchant Shipping Act, 2025, and relevant admiralty laws.

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