Alang’s Shipbreaking Industry: A Success Story Under Strain
Alang, a global leader in ship recycling, is facing a period of decline. Over the past five years, the industry has encountered a multitude of challenges, both domestic and international, threatening its past success.
From Humble Beginnings to Open Market:
The story of Alang’s shipbreaking industry began in 1983, a modest operation with just a handful of plots in Bhavnagar district. Back then, even acquiring ships involved a semi-government body, MSTC, purchasing them via auctions. However, by 1990, things began to change. Alang’s industrialists were granted access to an open market for ship purchases, allowing for greater autonomy. Furthermore, 1993 saw an expansion in the number of shipbreaking plots, paving the way for a period of growth in the industry. Since then, the number of ships arriving at Alang for dismantling has steadily increased.
A Turning Point and Government Support:
The year 2019 marked a turning point for Alang. The shipbreaking industry began to face issues on multiple fronts, leading to a significant decrease in the number of ships being dismantled. Recognizing the industry’s struggles, both the central and state governments have taken steps to offer support. This includes tax and charge reductions – the most significant level of government support Alang has received in its 41-year history.
The Bureau of Indian Standards (BIS) Hurdle:
Despite the government’s efforts, one major hurdle remains – the Bureau of Indian Standards (BIS) regulations. Prior to 2014, plates from shipbreaking were used as raw material for re-rolling mills. However, a BIS regulation implemented that year prohibited this practice, significantly increasing the difficulty of separating and processing these materials.
The Diamond District’s Transformation:
The shipbreaking industry has become the backbone of Bhavnagar’s economy. While the diamond industry once held that distinction, most units and skilled workers have migrated to Surat over time. Today, Alang’s shipbreaking industry, directly and indirectly, employs an estimated 1.5 lakh people, including a significant number of migrant labourers.
Economic Impact and Tax Revenue:
When the shipbreaking industry thrives, it has a significant economic impact. It’s estimated that Alang contributes a staggering 4000 crores in direct and indirect tax revenue to the central and state governments. Naturally, the decline in the number of ships being dismantled has severely impacted this revenue stream, prompting the government to offer various reliefs to the industry.
The HKC Method: Slower Production, Lower Output:
Since 2015, ship recyclers have begun the gradual conversion of their plots to adhere to the Hong Kong Convention (HKC) international standards. While this ensures safer and more environmentally friendly practices, it has come at a cost. The HKC-compliant method has led to a decrease in production and a slower ship-breaking pace compared to earlier practices.
International Pressures Mount:
Alang’s struggles extend beyond domestic issues. The industry faces fierce competition from neighbouring countries offering less stringent regulations. Additionally, international factors like illegal activities occurring at sea and issues with the Panama Canal are causing owners to opt for repairs rather than scrapping their ageing vessels. This trend directly impacts the number of ships reaching Alang for dismantling.
Rameshbhai Mendpara, Vice President of the Ship Recycling Industries Association (India), aptly summarizes the situation: “The industry succumbs to maximum international factors.”
Looking Ahead:
Alang’s shipbreaking industry is at a crossroads. While government support and international regulations aim to improve safety and environmental practices, the industry faces significant challenges. Addressing these challenges, both domestically and internationally, will be crucial in ensuring the future of Alang’s shipbreaking industry and the livelihoods it supports.
