Key Updates on IFSCA's Amendments to the Ship Leasing Framework for Finance Companies

Date of Circular: April 7, 2025

Circular No.: F. No. 496/IFSCA/FC/SLF/2025-26/01

Issued by: International Financial Services Centres Authority (IFSCA)

Applies to: All Finance Companies / Finance Units registered in IFSCs

📌 Background

IFSCA has been at the forefront of promoting innovative financial activities within India's GIFT City IFSC. One such initiative is the Ship Leasing Framework, originally notified in August 2022, allowing finance companies to engage in ship leasing from the IFSC platform.

Over time, IFSCA has introduced additional regulatory guidance—like the May 2024 circular—to strengthen this framework.

The latest circular (April 2025) brings two critical changes:

1. Currency norms for ship leasing business

2. Restrictions on certain domestic-to-IFSC ship transfers

Let’s break down what this means for you.

⚙️ 1. Currency for Conduct of Business – Updated Clause

✅ What’s Changed?

Clause 3.L of the original framework has now been replaced.

📜 New Provisions (Effective Immediately):

• Invoicing & Payments:The lessor (finance company) must now:

  • Raise invoices in any foreign currency listed in the First Schedule of the IFSCA (Banking Regulations), 2020.

  • Receive payments in the same foreign currency through its foreign currency account maintained with an IFSC Banking Unit (IBU).

• Use of SNRR Account (Outside IFSC):Lessors can open an SNRR (Special Non-Resident Rupee) account with an authorised dealer bank in India (outside IFSC) under:

💡 Why This Matters:

This move aligns with international best practices and:

• Enhances foreign currency transparency

• Facilitates smoother cross-border transactions

• Supports ease of doing business for global players within GIFT IFSC

  

⚠️ 2. Restrictions on Transfer of Ship Leasing / Ownership Rights

IFSCA has also updated its May 2024 circular that outlined conditions for permissible transactions under the Ship Leasing Framework.

❗ New Clause (Effective Immediately):

• No Domestic-to-IFSC Transfer: An applicant or registered lessor cannot engage in transactions where:

  • A resident Indian transfers ownership or leasehold rights of a ship/ocean vessel

  • To an IFSC-based entity

  • If the ship is meant solely for services to Indian residents in a single financial year

✅ Important Exception:

• If the vessel is newly acquired from an Indian shipyard, this restriction will not apply.

🎯 Intent Behind This Change:

• Prevents round-tripping of assets for domestic benefits

• Ensures IFSC entities remain globally aligned and not just servicing Indian domestic needs

• Encourages new shipbuilding activity in India, aligning with Aatmanirbhar Bharat

🧩 What Should Finance Companies Ship Leasing Do Now?

1. Review your contracts & invoicing mechanismsEnsure invoicing is done in eligible foreign currencies and payments flow into IBU foreign currency accounts.

2. Reassess business modelsIf your current leasing structures involve Indian resident entities or domestic-only routes, revalidate for compliance.

3. Explore SNRR optionsOpen SNRR accounts if you foresee domestic payment obligations outside IFSC scope.

4. Stay updated with IFSCA regulationsMonitor future circulars and updates – especially as GIFT City’s regulatory ecosystem evolves rapidly.

✍️ Final Thoughts

These amendments highlight IFSCA’s continued commitment to:

• Ensuring global legitimacy of ship leasing operations

• Promoting transparency in currency and capital movement

• Encouraging new shipbuilding in India rather than asset recycling

If you're part of a finance company in GIFT City—or planning to set one up—understanding and implementing these changes is crucial to staying compliant and competitive.

📌 Need help interpreting these changes for your business or setting up a Finance Company in GIFT City?

Let’s connect — we help simplify regulations and accelerate your success in India’s only IFSC.

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