Reliance Industries Plans ₹22,033 Crore Ship Leasing Venture at GIFT City in Gujarat

Ahmedabad : Reliance Industries Limited (RIL) is set to embark on a significant venture, aiming to establish a ship leasing entity at Gujarat International Finance Tec-City (GIFT City), located within the International Financial Services Centre (IFSC). With an estimated investment of ₹22,033 crore, this initiative marks a strategic move by Reliance to diversify its portfolio and tap into emerging opportunities in the maritime industry.

Reliance Industries Limited (RIL) is charting a bold course in the maritime industry with plans to establish a ship leasing entity at the Gujarat International Finance Tec-City (GIFT City) within the International Financial Services Centre (IFSC). The ambitious venture, estimated to require an investment of ₹22,033 crore, underscores Reliance’s commitment to exploring new avenues for growth and expansion.

The proposed establishment of this entity, named Reliance International Leasing IFSC, is contingent upon approval from the Special Economic Zone (SEZ) committee. Sources familiar with the matter disclosed that the proposal presented to the GIFT SEZ Authority seeks approval for setting up a ship leasing firm focused on Operating Lease of ships, vessels, and voyage charters.

To spearhead this initiative, Reliance has appointed a team of seasoned professionals as directors for the venture. Among them are Hitesh Kumar Sethia, President and CEO of Jio Financial Services Ltd; Amit Mehta, a veteran with two decades of experience at RIL serving as Senior Vice President and Head of Gases; and Jayesh Biharilal Dholakia, an Assistant General Manager at RIL.

In terms of financing, Reliance intends to leverage capital from financial liabilities and internal accruals. The proposed investment structure includes ₹5 crore from financial liabilities, ₹11,607 crore from financial liabilities, and the remaining ₹13.26 crore from internal accruals.

Seeking approvals from the International Financial Services Centres Authority (IFSCA), Reliance aims to navigate regulatory processes swiftly. Financial projections indicate a robust outlook, with a projected Free on Board (FOB) value for export services over five years estimated at ₹10,780.41 crore, resulting in a Net Foreign Exchange (NFE) of ₹383 crore after accounting for foreign exchange outgo.

Dipesh Shah, Executive Director (Development) at IFSCA, confirmed the receipt of Reliance International Leasing IFSC Ltd’s application as per the report published in Hindu Businessline, expressing optimism about the burgeoning interest in ship leasing businesses at GIFT City. Notably, Ripley Shipping India IFSC Private Ltd was the first company to lease a vessel from GIFT City, receiving a certificate of registration from IFSCA in March 2023.

The move to establish a ship leasing entity at GIFT City holds significance for the Indian maritime landscape, facilitating transactions in foreign currency and incentivizing the return of Indian firms that had previously shifted overseas due to regulatory and tax concerns. Currently, only Indian flag ships are permitted in IFSC-GIFT City, aligned with regulations under the Merchant Shipping Act, 1958.

Ship leasing emerges as a vital trading instrument globally, catering to various segments of the shipping industry, including containers, dry bulk, and tankers. With the global charter hire market estimated at $100 billion as of April 2023, Reliance’s foray into ship leasing presents promising opportunities for growth and market expansion in the maritime sector.