Alang yields ship breaking slot

Alang's ship-breaking industry, considered to be the world's largest ship-breaking yard two years back, has slipped to number three position losing to China last year, followed by Bangladesh this year.

Ship-breaking in China has already exceeded over 1.5 million tonnes, while Bangladesh, is at over 7 lakh tonnes. Alang's ship-breaking yard is yet to cross 5 lakh tonnes since January this year.

If the government does not take appropriate measures soon, Pakistan will also surpass Alang's ship-breaking yard. Pakistan has reduced the import duty from 10 per cent last year to 5 per cent this year, to be internationally competitive.

"That we have lost our number one position in the world ranking speaks volumes about the ills of the industry. Unjust treatment year after year by the government in the form of heavy Customs duty, loss of parity with the imported ferrous scrap, are some of the factors responsible." Raj Bansal, president, Gujarat Ship Breakers' Association told Business Standard.

Moreover, rapidly rising cost of ships in the international market, undue tightening of the rules and regulations vis-à-vis neighbouring ship-breakers, have contributed negatively," Raj Bansal, president, Gujarat Ship Breakers' Association (GSBA) told Business Standard on Tuesday.

The tonnage capacity of the yard is over 5 million tonnes per annum, but so far, it has achieved its best tonnage capacity of 3 million tonnes in 2000, while the industry was at its peak.

This year, with the increased prices of ships from $250 per light displacement tonnage (LDT) to over $400 per LDT, has forced the industry to operate below 20 per cent of its capacity level and the tonnage capacity is expected to be utilised below one million ton this year.

"If the industry works with full capacity utilisation of 5 million tonnes, it could generate revenues of around Rs 9,000 crore, while this year, Alang's ship-breaking industry is striving to cross the Rs 1,800 crore mark," Vipin Aggarwal, secretary, Gujarat Ship-Breakers' Association told Business Standard on Tuesday.

India's steel consumption is pegged at around 35 million tonnes as compared to China, which consumes over 100 million tonnes. 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 the ship-breaking industry.