FM calls for developing legal systems for int’l arbitration centre

Mumbai: Finance Minister Nirmala Sitharaman on Thursday called for developing capabilities and legal systems to have an international arbitration centre for the maritime sector in the country.

She also said financing, insurance, arbitration and the creation of more diverse options are required to boost the country’s shipbuilding capacity.

Addressing a session on ‘Maritime Financing, Insurance and Arbitration’ at the concluding day of the third Global Maritime India Summit (GMIS) here, the minister said that though there are many Indians working in international arbitration centres in London or Singapore or Dubai, they are all just helping the senior lawyers there and not leading a case. This needs to change and can change, she said. But there is a need to improve and strengthen our arbitration processes and laws so that they meet global standards, the minister said, adding that “when we have developed a system for this, we can also have an arbitration centre”.

Financing, insurance, arbitration and the creation of more diverse options are required to boost the country’s shipbuilding capacity, she noted.

“India has passed an arbitration bill, has got an arbitration centre and is improving its strength in arbitration, the minister said, adding that a need has been felt to have a full-fledged Indian-owned and India-based Protection and Indemnity (P&I) entity to reduce India’s vulnerability to international sanctions and pressures.

This will also provide greater strategic flexibility in shipping operations and provide protection of liabilities to the ships operating in coastal and inland waters during their operations, Sitharaman noted.

An expert committee has also been constituted to relook at the Harmonised Master List (HML) and to streamline the understanding of infrastructure among all financing/regulatory institutions, she said.

The framework being developed by this committee would be instrumental in updating HML from time to time to categorise relevant sectors like infrastructure, the minister added.

The Global Maritime India Summit is being held at a time when globally there are a lot of challenges — in security of supply, in disruption of supply, in value chains being broken.

“Shipments of major commodities are at risk sometimes, and food insecurity and energy insecurity all creep in because of this and add to inflation. Economies, which are coming out of COVID, are facing this challenge,” she added.

On the need to improve financing to the maritime sector, she admitted that despite having a strong balance sheet, banks are not very enthused about funding this sector, largely due to the higher risks this sector is associated with.

Sitharaman said she is in talks with public sector banks to have a more positive approach to this sector. “I also want private sector lenders to look at shipping and maritime sectors more proactively,” she said, adding that “operators should also look at fundraising on their own by asset monetisation”.

On the IFSCA located in GIFT City, which notified ‘ship lease’ as a financial product, and provided a framework for enabling ship finance and operating leases through the ‘Framework for Ship Leasing’, she said various tax incentives and exemptions are offered for ship-leasing entities in the IFSC, including tax holiday for 10 years, no capital gains during tax holding, and stamp duty exemption for five years, among others.