On April 28th, 2025, in Mumbai, France-based CMA CGM S A, the world’s third-largest container shipping line, will reflag one of its container ships to the Indian flag. This move is significant as it marks the first instance of a major global container carrier registering a container vessel in India. This is notable because India has traditionally been perceived by fleet owners as a jurisdiction with unfavorable tax structures, lending conditions, and a regulatory environment. CMA CGM’s decision could signal a potential shift in this perception, or may be driven by specific strategic considerations for the company, reports the Economic Times.
Small Start
CMA CGM, a major shipping line, has established a new entity within the Gujarat International Finance Tec-City (GIFT City). This unit is named ‘CMA CGM Shipping Assets India IFSC Pvt Ltd’. Its primary purpose is to own a container ship named ‘CMA CGM Vitoria’. This vessel has a capacity of 2,592 twenty-foot equivalent units (TEUs) and was built in 2008. Currently, the ‘CMA CGM Vitoria’ sails under the Malta flag.
The French shipping company also has plans to register a second container ship under the Indian flag shortly. This vessel, named ‘CMA CGM Manaus’, was built in 2009 and, like the ‘CMA CGM Vitoria’, has a capacity of 2,592 TEUs and currently flies the Malta flag. A government official indicated that the process of converting the ‘CMA CGM Manaus’ to the Indian flag will be conducted outside of India.
In the shipping industry, the flag that a ship flies indicates the nation where it is officially registered.
According to the government official, CMA CGM’s initial move is a “small start.” He suggested that the company is “testing the waters” with this initial registration and that more of their ships will likely be converted to the Indian flag soon.
The official further noted that “CMA CGM is very positive with the response of the Directorate General of Shipping, the maritime administration of India, to facilitate the conversion of the ships to the Indian flag. So, they certainly have committed more vessels to fly the Indian flag.” This indicates a positive relationship between the shipping company and the Indian maritime authorities, encouraging further registration of vessels under the Indian flag.
Legal Mandate
Indian flag ships are legally mandated to employ only Indian nationals as crew members. Additionally, these vessels must be compulsorily classified with the Indian Register of Shipping (IRClass), which is India’s own ship classification society. IRClass is a member of the International Association of Classification Societies and is responsible for verifying the seaworthiness of ships.
A significant portion of the world’s shipping, nearly 75 percent by tonnage, operates under a flag of convenience (FOC) or open registry.
A flag of convenience (FOC) is a business practice where a ship owner registers their vessel in a country different from their own. These FOC nations, such as the Marshall Islands, Cyprus, Panama, Liberia, and Malta, typically do not impose taxes on ship owners but instead charge an annual fee based on the ship’s gross registered tonnage (GRT).
Despite what is described as an unfavorable tax and regulatory environment for Indian-flagged vessels, Mitsui O.S.K. Lines, Ltd (MOL), a major Japanese transport company and the world’s second-largest ship owner by fleet size, has registered ships in India through a local subsidiary. MOL is already the fourth-largest fleet owner in India, operating nine oil, product, and gas carriers under the Indian flag from the Domestic Tariff Area (DTA).
BW LPG India, a subsidiary of BW LPG Ltd, which is listed in Oslo and New York and is the world’s largest owner and operator of LPG vessels, including Very Large Gas Carriers (VLGCs), is the largest owner and operator of Indian-flagged VLGCs, with a fleet of nine LPG carriers.
A substantial majority of India’s export-import container trade, as much as 99 percent by volume, is carried by foreign shipping lines, including major players such as MSC, CMA CGM, Maersk, Hapag Lloyd, Evergreen, Wan Hai, and Yang Ming.
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Source: Economic Times
