Context: In pursuance of ‘Make in India’ policy of the Government of India, Ministry of Shipping has reviewed the ROFR (Right of First Refusal) licensing conditions for chartering of vessels/Ships through tender process for all types of requirements.
About the guidelines:
- To promote the demand of the ships built in India, priority in chartering of vessels is given to vessels built in India, flagged in India and owned by Indians under the amendments in the guidelines of ROFR(Right of First Refusal).
- Chartering is an agreement in which a shipowner agrees to rent out a ship to a cargo owner to move the cargo from Point A to Point B.
- The Ministry of Shipping has made provision for long-term subsidy for shipbuilding activities under shipbuilding financial assistance policy (2016-2026).
- Atma Nirbhar Shipping: The revised guidelines will give a boost to the domestic shipbuilding and shipping industries. The revision of RoFR licensing conditions is a giant step towards.
- It will promote ‘Make in India’ initiatives through self-reliance and will give a strategic boost to domestic Ship building industries, contributing towards long-term economic growth of India”.
Right of First Refusal
- A right of first refusal is a contractual right giving its holder the option to transact with the other contracting party before others can.
- The ROFR assures the holder that they will not lose their rights to an asset if others express interest.
- The right of first refusal is usually triggered when a third party offers to buy or lease the property owner’s asset.
- Before the property owner accepts this offer, the property holder (the person with the right of first refusal) must be allowed to buy or lease the asset under the same terms offered by the third party.
- The right of first refusal can limit the owner's potential profits as they are restricted from negotiating third-party offers before the right’s holder.
Image source: GOI