- Why in news
- On 10 July 2026 the Ministry of Ports, Shipping and Waterways exempted IFSC units in GIFT City from the Section 11 licensing requirement of the Coastal Shipping Act, 2025 for chartering foreign vessels for EXIM and international trade.
- What it is
- The Coastal Shipping Act, 2025 regulates coastal trade in India and keeps the cabotage regime, under which coastal trade is reserved for Indian vessels unless licensed. Section 11 requires a licence from the Director General of Shipping to charter foreign vessels. GIFT City in Gandhinagar is India's first International Financial Services Centre, regulated by the IFSCA under the IFSCA Act, 2019.
- Exemption
- IFSC units in GIFT City need no licence under Section 11 to charter foreign vessels for EXIM and international trade.
- Licensing authority
- The licence that is no longer needed was issued by the Director General of Shipping.
- Coastal trade untouched
- The exemption does not change the cabotage regime or safeguards for coastal shipping.
- Effect and definition
- The notification is effective immediately. IFSC is defined by Section 3(1)(g) of the IFSCA Act, 2019.
- IFSC regulator
- The International Financial Services Centres Authority (IFSCA) is the unified regulator for IFSCs, set up under the 2019 Act.
Don’t confuse with Cabotage vs EXIM chartering: Cabotage covers coastal trade between Indian ports and stays restricted; this exemption covers only chartering for EXIM and international trade.
Don’t confuse with IFSCA vs SEBI/RBI: IFSCA regulates financial services within IFSCs; SEBI and RBI regulate them in the domestic area.
Laws, judgments and statutory bodies: 30 Prelims questions since 2013 (what the law says, who chairs, legal basis). In Mains, 44 news-triggered questions, most in GS2, asking for provisions and challenges.
Why it matters
- Lowers regulatory friction for ship leasing and financing, helping GIFT City become a maritime finance hub.
- Draws global capital into maritime assets without weakening coastal trade protection.
Problems
- Competing with established leasing hubs such as Singapore and Dubai.
- Risk of misuse if the exemption is used to blur coastal and international trade.
Way forward
- Give tax and regulatory parity with rival maritime hubs.
- Monitor use of the exemption to keep the cabotage safeguards intact.
Put in your answer
Coastal Shipping Act, 2025: Example of targeted, minimal-governance regulation: a sectoral exemption while the core cabotage regime stays.
GIFT City: India's first IFSC, regulated by IFSCA under the 2019 Act, a platform for global financial and maritime services.
- 2025Mains GS3 · Q20Why maritime security is vital to protect India's sea trade; challenges and way forward.
- 2016Mains GS1 · Q19Problems and prospects of inland water transport in India.
- 2023Mains GS2 · Q20IMO's role in protecting environment and enhancing maritime safety and security.
- 2026Prelims Q24How Vizhinjam port shifts India's maritime trade and reduces foreign dependence.
- 2026Prelims Q35Statements on Sagarmala's port-led growth, coastal shipping gains, and Sagarmala 2.0.
UPSC’s own questions that come close to this issue, from our Prelims and Mains banks.
Prelims practice · Statements
Ours, not from a UPSC paper
Consider the following statements:
- 1.The exemption removes the Section 11 licensing requirement of the Coastal Shipping Act, 2025 for IFSC units in GIFT City chartering foreign vessels for EXIM and international trade.
- 2.The exemption also relaxes the cabotage rules that apply to coastal trade.
- 3.The International Financial Services Centres Authority is the unified regulator for financial services in International Financial Services Centres in India.
Which of the statements given above is/are correct?
True or false?
1 of 7
Statements the way Prelims prints them. Say first, then see the fact.
1.The exemption removes the Section 11 licensing requirement for IFSC units chartering foreign vessels for EXIM and international trade.
True. IFSC units are exempt from Section 11 licensing for such chartering.
2.The licence that IFSC units no longer need is granted by the Director General of Shipping.
True. The licensing authority is the Director General of Shipping.
3.The exemption also relaxes the cabotage rules applicable to coastal trade.
False. The cabotage regime and coastal safeguards remain unchanged.
4.The meaning of International Financial Services Centre in the notification is taken from the IFSCA Act, 2019.
True. It follows Section 3(1)(g) of the IFSCA Act, 2019.
5.The exemption will take effect only after a transition period of one year.
False. It comes into force with immediate effect.
6.The IFSCA is the unified regulator for financial services in International Financial Services Centres in India.
True. IFSCA, set up under the 2019 Act, is the unified regulator.
7.GIFT City, the site of the IFSC, is located in Mumbai.
False. GIFT City is in Gandhinagar, Gujarat.
Written by us from the release, not by UPSC; checked by a second model.
Worth revising until Prelims 2028: most news questions come within two years of the event.