Alang slips to fourth slot among ship breakers

Alang's ship-breaking yard, which was the world's largest ship breaking yard two years back, has slipped to the third position this year.

Ship breaking output in China has exceeded 1.5 million tonne in the first three months of this year, followed by Bangladesh at over seven lakh tonne. In contrast, Alang's ship breaking yard is yet to cross five lakh tonne.

If the government does not take appropriate measures soon, Pakistan will also overtake Alang's ship breaking yard and the world's largest ship breaking yard will have to be satisfied with the status of India's largest ship breaking yard.

Pakistan has recently reduced duties on ships imported for breaking from 10 per cent last year to 5 per cent.

"That we have lost our number one position in the world speaks volumes about the ills of the industry. Unjust treatment at the hands of the government in the form of heavy customs duty and lack of parity with imported ferrous scrap are some of the main factors hindering the ship breaking industry," Raj Bansal, president, Gujarat Ship Breakers Association (GSBA), said.

"The rapidly rising cost of new ships in the international market has also contributed negatively," he added.

The tonnage capacity of the Alang yard is over five million tonne per annum. But, the best capacity achieved so far is three million tonne in 2000, when the industry was at its peak.

"This year, with prices of ships rising from $250 per light displacement tonnage (LDT) to over $400 per LDT, the ship-breaking industry is forced to operate with under 20 per cent capacity utilisation. Only about one million tonne capacity is likely to be used this year," said Vippin Aggarwal, secretary, Gujarat Ship-Breakers Association.

"If the industry works with full capacity utilisation, it could generate revenues of around Rs 9,000 crore. However, this year Alang's ship breaking yard is starving to cross the Rs 1800-crore mark," he added.

India's steel consumption is pegged at around 35 million tonne as compared to over 100 million tonne consumed in China. Bangladesh's ship breaking industry provides 90 per cent of the steel for consumption, while India consumes only 10 per cent of the steel from its ship breaking industry.