Government Exempts IFSC GIFT City Units from Licensing Requirement under the Coastal Shipping Act, 2025

Note: Sufficient Tier-1 facts gathered from PIB releases and the e-Gazette text of the Coastal Shipping Act, 2025.

1. At a Glance

Government has exempted IFSC GIFT City units (Gandhinagar) from the licensing requirement under Section 11 of the Coastal Shipping Act, 2025, for chartering foreign vessels in EXIM/international trade operations [S1].
Move is aimed at boosting India's maritime leasing and financing ecosystem and positioning GIFT City as a global maritime services hub [S1].
Relevant for UPSC as it links three high-yield areas: GIFT City/IFSC governance, maritime/coastal shipping law, and ease-of-doing-business reforms [S1].
Nodal Ministry: Ministry of Ports, Shipping and Waterways (MoPSW) [S1].

On 10 July 2026, MoPSW notified the exemption of IFSC GIFT City units from the Section 11 licensing mandate of the Coastal Shipping Act, 2025 [S1].
Union Minister Sarbananda Sonowal framed it as part of the government's push for "minimal governance" to unlock the maritime sector's potential [S1].

Coastal Shipping Act, 2025 (Act No. 20 of 2025) was cleared by Lok Sabha on 3 April 2025, passed by Rajya Sabha via voice vote, and received Presidential assent on 9 August 2025 [S2].
It replaces Part XIV of the Merchant Shipping Act, 1958 dealing with coasting trade and Indian ships, aligning India's cabotage regime with global norms [S2].
The Act has 6 chapters and 42 clauses; mandates a National Coastal and Inland Shipping Strategic Plan and a National Database for Coastal Shipping [S2].
The July 2026 exemption for GIFT City units is a subordinate notification under this parent Act, issued roughly 11 months after the Act's assent [S1][S2].

Item	Detail
Enabling Act	Coastal Shipping Act, 2025 (Act No. 20 of 2025) [S2]
Relevant Section	Section 11 — licensing of non-Indian vessels for coasting trade by Director General of Shipping [S1][S2]
Implementing Ministry	Ministry of Ports, Shipping and Waterways [S1]
Beneficiary Zone	IFSC, GIFT City, Gandhinagar [S1]
IFSC statutory basis	International Financial Services Centres Authority Act, 2019, Section 3(1)(g) [S1]
Scope of exemption	Licensing requirement only, for chartering foreign vessels for EXIM/international trade — not domestic coasting trade [S1]
Unaffected areas	Coastal trade framework, cabotage regime, shipping safety safeguards remain intact [S1]
Predecessor law repealed	Part XIV, Merchant Shipping Act, 1958 [S2]

Economic: Enables GIFT City IFSC units to undertake ship leasing, financing and asset management without domestic licensing friction, aiming to draw global maritime capital into India [S1].
Legal/Constitutional: Demonstrates delegated/subordinate legislation — an executive notification carving out a sectoral exemption within a parliamentary Act, without amending the Act itself [S1].
Administrative: Reflects inter-regulatory coordination between MoPSW (shipping regulator) and IFSCA (financial regulator) governing the same GIFT City units [S1].
Governance/Ease of doing business: Positioned explicitly as "minimal governance" — reducing licensing overhead while retaining safety/cabotage safeguards [S1].
Geopolitical/Strategic: Intended to compete with global maritime-financial hubs (e.g., Singapore, Dubai) by making GIFT City attractive for ship charter/leasing business [S1].

3 April 2025: Coastal Shipping Bill passed by Lok Sabha [S2].
9 August 2025: Presidential assent to Coastal Shipping Act, 2025 [S2].
10 July 2026: MoPSW notifies exemption for IFSC GIFT City units from Section 11 licensing [S1].

Coastal Shipping Act, 2025 is Act No. 20 of 2025 [S2].
It replaces Part XIV of the Merchant Shipping Act, 1958 [S2].
Nodal ministry for the Act: Ministry of Ports, Shipping and Waterways [S1][S2].
Presidential assent to the Act: 9 August 2025 [S2].
Lok Sabha passage date: 3 April 2025 [S2].
Act structure: 6 chapters, 42 clauses [S2].
Section 11 of the Act deals with licensing of foreign/non-Indian vessels for coasting trade, issued by the Director General of Shipping [S1][S2].
IFSC GIFT City units are located in Gandhinagar, Gujarat [S1].
IFSC is defined under Section 3(1)(g) of the IFSCA Act, 2019 [S1].
Exemption notified on 10 July 2026 is only from licensing, not from coastal trade/cabotage rules [S1].
Union Minister who commented on the exemption: Sarbananda Sonowal [S1].
The Act mandates a National Coastal and Inland Shipping Strategic Plan and a National Database for Coastal Shipping [S2].
Only Indian vessels may normally carry out coasting trade in coastal waters under the Act; non-Indian vessels need DG Shipping licence [S2].

GS-III: Infrastructure — Ports, Shipping; Indian Economy — investment, ease of doing business; Government policies and interventions.
GS-II: Government policies and interventions for development in various sectors; issues arising from design/implementation of policies.
Possible question stems: 1. "Discuss how the Coastal Shipping Act, 2025 seeks to modernise India's cabotage regime while balancing national security and commercial interests." 2. "Examine the significance of GIFT City IFSC as an emerging global hub for maritime leasing and financing. What regulatory reforms support this vision?" 3. "'Ease of doing business reforms in India often proceed through subordinate legislation rather than statutory amendment.' Discuss with reference to recent maritime sector notifications."

GIFT City / IFSCA Act, 2019 — parent regulatory framework for the exempted units.
Merchant Shipping Act, 1958 — predecessor law partly replaced by the 2025 Act.
Cabotage policy in India — core regulatory principle still retained despite the exemption.
Sagarmala Programme — broader maritime infrastructure initiative complementing this reform.
Ship leasing and financing ecosystem in India — economic rationale behind the exemption.
Ease of Doing Business reforms — governance theme this notification exemplifies.
National Coastal and Inland Shipping Strategic Plan — statutory mandate under the same 2025 Act.

Do not confuse Coastal Shipping Act, 2025 with the Merchant Shipping Act, 1958 (only Part XIV of the latter is replaced, not the entire Act) [S2].
The exemption is from licensing only, not a blanket exemption from all coastal shipping/cabotage rules — a common oversimplification [S1].
Nodal ministry is Ports, Shipping and Waterways, not Finance Ministry, even though GIFT City IFSC is otherwise regulated by IFSCA (a financial regulator) [S1].
Do not confuse the Bill's passage (April 2025) with Presidential assent (August 2025) — dates are often conflated in MCQs [S2].
GIFT City is in Gandhinagar, Gujarat, not Ahmedabad — a frequent factual slip.

[S1] Government Exempts IFSC GIFT City Units from Licensing Requirement under the Coastal Shipping Act, 2025 — https://www.pib.gov.in/PressReleasePage.aspx?PRID=2283401 — (tier: 1)
[S2] Coastal Shipping Act, 2025 (Act No. 20 of 2025), e-Gazette — https://egazette.gov.in/WriteReadData/2025/265334.pdf — (tier: 1)