India’s Shipbreaking Dilemma: A Double Standard?
Alang, India’s Shipbreaking Haven, Faces a Regulatory Conundrum
Alang, a coastal town in the Indian state of Gujarat, has long held the distinction of being Asia’s largest ship recycling hub. The vast shipbreaking yards, stretching along the coast, are a beehive of activity. They are filled with towering metal structures, decaying ships being dismantled, and workers busy stripping valuable materials for reuse in various industries. Over the years, Alang has made a conscious effort to adhere to international environmental and safety standards, often standing in stark contrast to many other shipbreaking destinations.
However, a recent incident involving an Indian government-affiliated ship has laid bare a contradiction at the heart of India’s shipbreaking policies. This event, which culminated in tragedy, has ignited a heated debate about the ethical and regulatory standards governing India’s shipbreaking industry.
The “Suvarna Swarajya” Incident
The controversy centres around the tanker ship “Suvarna Swarajya,” owned by the Shipping Corporation of India. In a shocking move, this Indian government-affiliated ship was sold to a buyer in Bangladesh, a country notorious for its lax environmental regulations and hazardous working conditions in the shipbreaking industry. This sale was conducted through a cash buyer, an intermediary who specializes in facilitating the sale of ships to countries with less stringent oversight on shipbreaking.
What followed next was a catastrophe. While the “Suvarna Swarajya” was being dismantled in Bangladesh, it tragically exploded, leading to the death of six workers. The explosion not only caused a humanitarian crisis but also raised serious questions about the ethical implications of India’s decision to allow the sale of its ships to countries known for poor safety records.
The international community was quick to react, with environmentalists, labour activists, and regulatory bodies condemning the Indian government’s decision. The sale and the subsequent accident underscored the dangers of shipbreaking in countries where safety standards are far from robust. More troubling, however, was the glaring contradiction: while India enforced strict regulations on foreign vessels being recycled at Alang, its ships were being sold off to places with fewer protections for both workers and the environment.
Double Standards in Shipbreaking Regulations
This incident has cast a harsh light on a regulatory double standard within India’s shipbreaking industry. Alang, despite its reputation, is often burdened with stringent international guidelines, ensuring that foreign ships are dismantled under safe and environmentally sound conditions. Yet, Indian-owned ships can be sold to countries like Bangladesh, where safety and environmental standards are significantly lower. This disparity has raised questions about India’s commitment to ethical ship recycling practices.
One of the reasons for this inconsistency lies in the complex web of regulations that govern the purchase and recycling of Indian ships. Indian shipbreakers must pay a Goods and Services Tax (GST) of 18% to the ship’s owner when purchasing Indian vessels for scrapping. On top of that, they face another 18% GST at the time of filing the bill of entry when the ship arrives at the shipbreaking yard. While they can claim a refund for the GST paid, the process is often slow and cumbersome, creating a significant financial burden on Indian shipbreakers. This double taxation discourages them from bidding on Indian ships, making it easier for the ships to be sold to foreign buyers, even those in countries with lax regulations.
In contrast, foreign ships coming to Alang for dismantling are not subject to the same level of taxation. The result is a system that puts Indian shipbreakers at a competitive disadvantage when attempting to buy and recycle domestic vessels.
Indian Vessels should be sold in public auction for domestic recycling
Rameshbhai Mendpara, Vice-President of the Ship Recycling Industries Association (India), has been vocal in advocating for reforms. According to Mendpara, the current policies surrounding Indian ship sales and recycling are riddled with inefficiencies and contradictions. He argues that the government should take proactive steps to ensure Indian ships are auctioned domestically, allowing local shipbreakers to bid for them. By doing so, the government can promote ethical recycling practices and ensure that the highest bidders—who are often the most responsible shipbreakers—acquire the vessels.
Furthermore, Mendpara has called for the elimination of the double taxation on domestic ships, a move that would level the playing field for Indian shipbreakers. Removing these tax barriers could incentivize domestic shipbreaking companies to bid for Indian ships and dismantle them under better-regulated conditions, avoiding the potential dangers of exporting ships to countries with poor safety records.
The Call for Reform
The incident involving “Suvarna Swarajya” has triggered a renewed call for reform within India’s shipbreaking sector. Industry stakeholders, environmentalists, and workers’ rights groups are now pushing for changes that would ensure Indian ships are dismantled domestically under the same strict safety and environmental regulations applied to foreign vessels.
The Broader Implications
The tragedy of the “Suvarna Swarajya” explosion has far-reaching implications. It is a reminder of the inherent risks involved in shipbreaking, particularly in regions with limited safety oversight. But it also raises deeper questions about India’s role in global ship recycling. Can the country maintain its position as a leader in sustainable shipbreaking while allowing its vessels to be scrapped in countries with less rigorous standards? Shouldn’t India, which is home to one of the world’s largest and most advanced shipbreaking hubs, be setting a global example by ensuring all its ships are dismantled domestically?
The international community is watching closely. Environmental groups and labour activists have already started putting pressure on the Indian government to address the issue, and there are growing calls for India to adopt a more consistent and ethical approach to ship recycling.
The Road Ahead
The “Suvarna Swarajya” incident may prove to be a turning point for India’s shipbreaking industry. The stark contrast between Alang’s commitment to international standards and the lax regulations governing Indian ships being sent abroad for dismantling is no longer something that can be ignored.
For India to safeguard its reputation as a responsible shipbreaking nation, it must take decisive action. This includes implementing reforms that promote domestic ship recycling, ensuring that Indian ships are subjected to the same stringent safety and environmental standards as foreign vessels. At the same time, eliminating double taxation on domestic ships would make it more feasible for Indian shipbreakers to compete for and recycle Indian-owned ships.
By addressing these issues, India can not only prevent future tragedies like the one involving “Suvarna Swarajya,” but also set a global standard for ethical, safe, and environmentally responsible ship recycling.
