The Ship Recycling Industry in India Poised for 10% Annual Growth by 2028: A New Era of Sustainable Dismantling
India’s ship recycling industry, an essential part of the global maritime sector, is set to experience significant growth, with a projected compound annual growth rate (CAGR) of 10% by 2028. This prediction comes from a recent report by CareEdge Ratings, which highlights India’s pivotal role in the global ship recycling market. As the industry continues to evolve, India is positioned to expand its capacity, contributing both economically and environmentally to the future of maritime dismantling.
India’s Role in the Global Ship Recycling Market
India accounted for 33% of the global gross tonnage (GT) dismantled in 2023, second only to Bangladesh, which managed 46% of the market share. Together, these two countries are leading players in the ship recycling industry, which has become crucial for managing the end-of-life disposal of ships. Alongside Bangladesh, Pakistan, and Turkey, India forms part of the elite group of four nations responsible for over 90% of global ship recycling volumes.
In terms of facilities, India’s Alang ship recycling yard, located in Gujarat, is a global leader. With over 140 yards dedicated to the dismantling of ships, Alang plays a key role in India’s dominance of the market. Known for its extensive infrastructure, the yard has become a symbol of India’s capacity to handle large volumes of ships sustainably.
The report also forecasts that India’s ship recycling industry will handle between 3.8 and 4.2 million GT in 2025, a substantial increase from the estimated 2.3-2.6 million GT expected in 2024. This anticipated growth reflects several key factors, including increasing global demand for ship dismantling services, stabilization in scrap metal prices, and the availability of obsolete vessels.
The Global Context of Ship Recycling
The ship recycling industry has long been an integral part of the maritime sector. When ships reach the end of their operational lives, they are sent for dismantling, with valuable materials such as steel being salvaged and repurposed. The process is vital not only for resource recovery but also for environmental sustainability, as it prevents ships from being abandoned or dumped in oceans, which would otherwise lead to marine pollution.
Ship recycling is heavily concentrated in a few countries due to the labour-intensive nature of the work and the availability of suitable coastal infrastructure. Bangladesh, India, Pakistan, and Turkey have consistently led the industry, thanks to their large ship-breaking yards, affordable labour, and proximity to key maritime routes. These countries can dismantle vessels efficiently, salvaging significant amounts of metal, machinery, and other reusable materials.
However, while India and Bangladesh remain leaders, the global dynamics of ship recycling are constantly shifting. Contributions from other nations, including Pakistan and Turkey, have been more variable, with capacity constraints and economic fluctuations affecting their market share.
Drivers of Growth in India’s Ship Recycling Industry
According to the CareEdge report, several factors are driving the expected growth of India’s ship recycling industry. One of the key trends identified is the cooling-off of the Baltic Dry Index (BDI), which measures the cost of shipping raw materials and is often used as an indicator of global economic activity. A reduction in shipping costs, combined with an increase in obsolete vessels, is expected to drive more ships into the recycling market from 2025 onwards.
Additionally, the stabilization of heavy melting scrap (HMS) prices has created a favourable environment for ship recycling. HMS is one of the key by-products of ship dismantling, and its market price directly impacts the profitability of recycling operations. In India, prices for HMS surged from Rs 28,800 per tonne in August 2020 to a peak of Rs 54,400 per tonne in April 2022, driven by supply chain disruptions and increased demand for steel as part of the global post-pandemic economic recovery.
However, scrap prices began to decline after peaking, eventually settling at Rs 39,900 per tonne in December 2023. Since then, prices have stabilized between Rs 36,000 and Rs 44,000 per tonne, providing a more predictable market for ship recyclers and steel producers alike.
Green Ship Recycling and the Future
India’s growth in the ship recycling sector is also being supported by the development of greener, more sustainable dismantling practices. As global awareness of environmental issues increases, shipowners are seeking out facilities that adhere to international environmental and safety standards. Countries with better infrastructure and greener recycling facilities are expected to attract a larger share of the global ship recycling market in the coming years.
India has been investing in upgrading its recycling yards to comply with global standards such as the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships, adopted by the International Maritime Organization (IMO). These improvements have enhanced India’s reputation as a responsible player in the ship recycling industry, further boosting the country’s appeal to international shipowners.
As CareEdge Ratings’ Assistant Director, Sajni Shah, notes, India’s ship recycling sector is well-positioned to benefit from these trends. “Countries with better infrastructure and green recycling facilities are expected to attract a larger number of ships in the future,” she explains. “This, combined with the cooling-off of the Baltic Dry Index, stabilization of scrap prices, and the increase in obsolete ships, points to a significant uptick in ship recycling activity from 2025 onwards.”
Challenges and Opportunities
Despite the promising outlook, India’s ship recycling industry faces several challenges. The industry is highly dependent on global economic conditions, particularly the demand for steel and the availability of obsolete vessels. Additionally, the environmental impact of ship recycling, including the disposal of hazardous materials such as asbestos and heavy metals, remains a concern.
To address these challenges, India’s ship recycling facilities must continue to invest in green technology and infrastructure improvements. By adhering to international safety and environmental standards, India can position itself as a leader in sustainable ship recycling, attracting more business from global shipowners who are increasingly focused on corporate social responsibility and environmental sustainability.
The ship recycling industry in India is at a pivotal moment, with significant growth on the horizon. As the country continues to upgrade its facilities and adopt greener practices, it is well-positioned to capitalize on the increasing demand for sustainable ship recycling solutions. With its massive recycling capacity and strategic location, India will remain a dominant force in the global ship recycling market for years to come.
