Ship Recycling Industry Faces Uncertainty Amid Economic Challenges
The ship recycling industry, once a cornerstone of Bhavnagar’s economy, is grappling with severe challenges, making it difficult for the sector to regain its footing. Over the last two years, the industry has struggled to stay afloat, with economic hurdles and external factors causing considerable disruptions. Despite hopes that 2025 would bring a revival, the situation remains precarious as unexpected obstacles emerge.
Bhavnagar’s economy, traditionally powered by the ship recycling and diamond industries, has declined since both sectors entered a phase of downturn. This slump has had a cascading effect on local businesses and employment opportunities, significantly impacting the livelihoods of many in the region.
Shrinking Operations and Uncertainty
Currently, only about 30% of the 153 shipbreaking plots in Alang are operational, with just 12 ships nearing completion. This represents a stark contrast to the industry’s peak when most plots were bustling with activity. The slowdown in operations is primarily attributed to the rising cost of ship purchases, which must be paid in U.S. dollars through banks. The consistent depreciation of the Indian rupee against the dollar has made these transactions increasingly expensive, creating uncertainty about the future.
As of now, the rupee stands at 86.56 against the dollar, a sharp decline that has left shipbreakers hesitant to invest. The time lag between the purchase and delivery of ships—typically two months—further compounds this issue, as fluctuations in the exchange rate during this period can lead to significant financial losses.
According to Rameshbhai Mendpara, Vice President of the Ship Recycling Industries Association (India), “The ship recycling business is riddled with uncertainties. The ongoing geopolitical tensions and local challenges have reduced ship availability, while the declining value of the rupee has made operations riskier. The industry’s recovery remains uncertain.”
Declining Activity and Local Impact
In October 2024, Alang received 12 ships for dismantling, and in November, the number rose slightly to 14 ships, amounting to a total weight of 1.86 lakh tons. This slight uptick had sparked optimism that 2025 would mark the industry’s recovery. However, the continued volatility of the dollar and sluggish demand in the local scrap market have tempered these hopes.
The 12-kilometer Alang-Sosiya stretch, once teeming with activity during the industry’s peak, now lies eerily quiet. Where traffic jams were once a common sight, the roads now resemble a deserted path. The lack of movement on this vital route reflects the broader stagnation within the industry.
Moreover, demolition activities on government and grazing lands outside Alang have further disrupted the local ecosystem. Businesses dependent on the ship recycling industry are struggling to find new opportunities, adding to the economic strain in the region.
A Global and Local Conundrum
The challenges facing Alang are not limited to local factors. Globally, geopolitical tensions and conflicts among major nations have impacted the availability of ships for recycling. Simultaneously, domestic issues such as the implementation of BIS (Bureau of Indian Standards) regulations have added to the woes of industry stakeholders.
The local scrap market, another critical component of the industry’s ecosystem, remains subdued. This lack of demand has put additional pressure on shipbreakers, who are already grappling with high costs and uncertain returns.
Industry Experts Call for Stability
Despite the grim outlook, experts believe that stability in the exchange rate and an uptick in international trade could help the industry recover. Alang’s shipbreakers have long been resilient, adapting to changing circumstances and finding ways to remain competitive. However, this time, the combination of global and local challenges has created a perfect storm.
“The situation is dire, but not irrecoverable,” says an industry veteran. “With coordinated efforts from the government to stabilize the rupee and address regulatory hurdles, the ship recycling industry could regain its momentum. The international market is showing signs of activity, and if managed well, 2025 could still be a turnaround year.”
Looking Ahead
The ship recycling and diamond industries have been the backbone of Bhavnagar’s economic engine. Their prolonged downturn has affected not only those directly involved in these businesses but also ancillary sectors and employment at large. The hope for recovery lies in stabilizing economic conditions and addressing both global and domestic challenges.
Until then, the once-bustling shipbreaking yards of Alang remain a shadow of their former selves, emblematic of an industry caught in a web of uncertainty. As stakeholders navigate these turbulent waters, all eyes remain on the steps that can bring about a much-needed revival.
