In order
to attract more vessels to Indian ship breaking yards, including the world’s
largest at Alang in Gujarat, and for better marketing Indian ship recycling
yards to international shipping, the Ministry of Shipping has decided to bring
the ship breaking sector under its wings from the Steel Ministry. The ship
breaking industry provides direct employment to nearly 40,000 people and earns
annual revenues of around 2,500 crore. However, it is not in a healthy state
due to competition from neighbouring countries. This segment of the industry
has relatively been less spoken or heard about, however it is an important
fragment of the industry which in its time has also flourished a new market for
reusable products.
Under the
15 major projects taken up under the Ministry’s comprehensive action plan, it
had constituted an inter-ministerial ship breaking scrap committee.
The
Ministry would be seeking help from the Japan International Cooperation Agency
to upgrade the existing infrastructure at Alang. Besides, steps would be taken
to modernise the Darukhana ship breaking facility at Mumbai Port.
It was
announced in the recent Union Budget that the basic Customs duty on ships
imported for breaking would be rationalised from 5% to 2.5%. The duty cut also
puts ship-breakers on a par with their primary and nearly three times bigger
competitor, the molten-scrap importers, who have enjoyed 2.5 per cent import
duty for a long time. The duty cut, however, is not expected to significantly
increase business volumes for these secondary sources of steel. But for
ship-breakers, profitability and competitiveness, which had eroded as a
plunging rupee last fiscal helped Bangladeshi, Pakistani and Chinese rivals do
better, will improve hopefully in their favour.
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