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Ship Recycling : Gujarat’s 2024-25 State Budget Aims to Double Capacity: Yet Implementation Remains Elusive

Ship Recycling Market Experiences Mixed Fortunes: Environmental Controversy Looms Large

Gujarat’s 2024-25 State Budget Aims to Double Ship Recycling Capacity: Yet Implementation Remains Elusive

The latest Gujarat state budget for the year 2024-25 has once again highlighted the ambition to double the capacity of Alang ship recycling yard. This goal has been reiterated for the past four years, but actual progress seems to be lacking.

Back in the Union Budget for 2021-22, Finance Minister Nirmala Sitharaman emphasized the aim to double the ship recycling capacity to 9 million metric tonnes by the year 2024. However, as we’ve entered 2024, little progress seems to have been made towards achieving this target. In 2023, only 141 ships were brought to the Alang Ship Recycling Yard for scrapping, amounting to a total weight of 10,29,327 metric tons for the year. This figure falls significantly short of the one-ninth mark of the target set by the Union Finance Minister earlier and announced in the State Budget recently.

India once held the position of conducting the largest ship recycling in the world in terms of tonnage. However, its share has dwindled to less than 30 percent now. The peak was witnessed in the year 2011-12 at the Alang Shipbreaking Yard, with 415 ships weighing 38,56,072 metric tons LDT. Since then, there has been a consistent decline in both the number of ships and tonnages. According to Naresh Champaklal Kothari of Phoenix Shipping, predicting the number of ships coming to Alang depends on various international and local factors.

Despite the central government’s efforts, such as abolishing the import customs duty on ships and the state government providing concessions, including plot rent and housing cess, the shipbreaking business remains stagnant. Most shipbreakers are facing losses due to uncertainties in the domestic scrap market, affecting their economic viability.

While the announcement of doubling the ship recycling capacity is welcomed, the methods to achieve this remain undisclosed. Both in the central government’s budget and now in the state’s budget, the aspiration to increase capacity to 9 million metric tonnes has been mentioned, but specifics on how to accomplish this are missing.

Moreover, the proposal to construct 42 new shipbreaking plots in Mathawada, adjacent to Alang, made three years ago by the state government, seems to be stuck without any tangible progress on the ground. Despite these announcements, the ship recycling industry’s capacity expansion remains a distant reality, leaving stakeholders uncertain about when or how the industry will recover.

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