‘Doubling ship-recycling capacities by 2024 is just a work half-done’

Our Bureau Ahmedabad | Updated on February 01, 2021

Industry seeks support on finance and compliance with EU conditions

The target of doubling ship recycling capacities at Alang by 2024 is just a work half-done. For the other half, it will require a trauma healthcare centre, medical waste disposal mechanism and conducive support from the financial institutions, ship recycling players informed after the Union Finance Minister Nirmala Sitharaman's budget announcements on Monday.

India has enacted Recycling of Ships Act, 2019 and acceded to the Hong Kong International Convention.

"Around 90 ship recycling yards at Alang in Gujarat have already achieved HKC-compliant certificates. Efforts will be made to bring more ships to India from Europe and Japan. Recycling capacity of around 4.5 Million Light Displacement Tonne (LDT) will be doubled by 2024. This is expected to generate an additional 1.5 lakh jobs for our youth," the Finance Minister said.

But the industry has expressed its on-ground challenges to achieve this target. Speaking to BusinessLine, Mukeshbhai Patel, Chairman of the largest Indian ship-recycler Shree Ram Group informed that a committee from the European Union had conducted a site inspection and found some gaps in the medical waste disposal and trauma care facilities.

The inspection had revealed the lack of adequate hospital/trauma care facilities and medical waste disposal mechanisms in the Alang area.

Bank credit

"Besides ensuring that these facilities come up at Alang, the Centre must also direct the banks to make it conducive for the players. Banks already have 100 per cent security because the ship itself is mortgaged. But currently, shipbreakers are facing a lot of difficulties in securing bank finance. They ask for heavy collaterals, with increased charges for issuing a letter of credit. For us to stay competitive in the international market, we should get comfortable access to finance," said Patel.

Also, there is a demand to revive and reintroduce the amalgamation scheme to enhance the plots’ size. "Earlier there was a policy to allow the amalgamation of two plots into a big one. But that was scrapped some time ago. Now to achieve the target of doubling the capacity that policy needs to be reintroduced," he added.

Located at Gujarat’s Bhavnagar district on the Arabian Sea coast, Alang had beached 196 ships during the calendar year 2020 for dismantling, which was higher than 186 in 2019.

Currently, the iconic world's longest-serving aircraft carrier, INS Viraat is being cut and recycled at Alang.

Published on February 01, 2021

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