Inmar Legal Ltd associate Pavel Figurov tells ACQ that it‘s not all plain sailing when it comes to Federal Law in Russia

Federal Law On Amendments to Certain Legislative Acts of the Russian
Federation Related to the Implementation of State Support Measures for
Shipbuilding and Navigation was signed by Dmitry Medvedev on 7 November,

The Federal Law embraces two most important topics for
Russian shipbuilders and ship owners. They are shipbuilding industry
support and amendment of Russian International Ship Register (RISR)

Though the Federal Law is mostly well-done, it has some controversial moments that are likely to be settled in the future.

order to support shipbuilding industry the Federal Law gives some
privileges for shipbuilding and repairing enterprises having residential
status in industrial economic zones, such as land and property tax

Introduction of these provisions is believed to reduce
the cost of shipbuilding and repairs at Russian shipyards that will
allow them to compete on the same level with the foreign shipyards.
Though it is necessary to note that shipbuilding industry is limited by
Russian banks unwillingness to provide loans for shipbuilding in Russia
on reasonable terms. For example, current loans in Russian banks have a
fixed term of repayment (from 5 to 7 years) and high interest rate
(exceeding 10% annually).

The Federal Law also provides special
privileges for vessels constructed at the Russian shipyards after 1
January , 2010 (RISR registration of both ocean vessels and river and
river-sea ones, coastal traffic permission for those ships, income tax
remission concerning coastal traffic via those ships).

privileges for newly constructed ships will undoubtedly motivate ship
owners to give orders for ship building to Russian yards and their
consequent registration under the Russian flag. But at the same time we
believe the registration of all newly constructed ships particularly in
the RISR to be incorrect.

International registration of all
vessels (including river ones), even if they are never engaged in
international shipments, contradicts the whole concept of an
international register and the way those registers function all over the
world. In conclusion we shall say that the Federal Law refers to very
important questions and has a number of provisions with a potential to
change the situation in shipping industry and RISR attractiveness, but
there still are some improvements to be made.

There’s an increased
effort for Indian ports and terminals to meet the growing demand in
both infrastructure and capacity. ACQ spoke to Shardul Thacker of Mulla
& Mulla who shed some light on this and other India Maritime issues.

To efficiently handle the growing demand, the Ministry of
Shipping in 2010 introduced a land policy for major ports to optimize
revenue from land either for use by the Ministry of Shipping, Government
of India or through the land leases. Pursuant to reports of the
Ministry, steps are being taken to increase India’s share in global ship
building to 5 percent from the present 1 percent and to raise the share
of Indian seafarers from the current level of 7 percent in the global
shipping industry to at least 9 percent by 2015.

An income tax
exemption of 100 percent is provided for a period of 10 years for port
developmental projects. Jawaharlal Nehru Port Trust proposes to sign an
MOU with a private sector consortium for development of Phase I of the
4th Container Terminal at a cost of INR 4,100 crore. The terminal is
expected to handle 2.4 million twenty-foot equivalent unit. Twenty two
projects worth over Rupees 60bn across major ports in India including
construction of berths, mechanization of cargo handling, deepening of
channels, quicker rail and road evacuation of cargo etc. are underway.
The Government estimates an investment of Rupee 2,870bn by 2020 so that
the 12 major ports and 200 ports if India efficiently handle 2.5 billion
tons of cargo.

Piracy poses a significant threat for
shippers/mariners. Security measures to combat piracy should include
cooperation between nations through sea patrols, increased coordination
between Coast Guard and Naval forces and training them in modern arms
and surveillance, sharing information and reports on piracy and physical
security training to shipmasters and seafarers transiting high-risk

Thailand’s maritime partnership with India to develop
seaport would be an effective step in achieving India’s ‘Look East’
Policy and Thailand’s ‘Look West’ Policy. It would reinforce Indo-Thai
relations, intensify economic links thereby expanding regional and
bilateral markets for trade, investments and industrial development
resulting in doubling bilateral trade to around $14bn by 2014. It will
enhance water connectivity between the two maritime neighbours and
assist countering the common security threats such as terrorism,
security of sea lanes of communication and piracy.

Source: ACQ Magazine, January-February 2012.