In FY25, Alang-Sosiya in Gujarat’s Bhavnagar district, home to the world’s largest ship-breaking facilities, recycled only 113 ships, the lowest amount in a decade. These ships, sold by fleet owners for recycling, had a Light Displacement Tonnage (LDT) of 10.06199 lakhs. LDT refers to the weight of a ship’s hull, machinery, and equipment, serving as the basis for scrapping ships. In comparison, in FY24, Alang recycled 125 ships with a LDT of 9.44069 lakhs, and in FY23, 131 ships were recycled with a LDT of 11.47480 lakhs. The decline in ship recycling at Alang is attributed to booming freight rates, prompting fleet owners to continue using their old ships rather than trading them for dismantling.
Despite the current soft recycling activity, there is potential for increased volumes in the coming years. Factors contributing to this trend include anticipated softer shipping markets in some sectors and strong market conditions that have previously limited the tonnage supply to the recycling market. Alang ship recyclers are hopeful for a turnaround with the proposed ship recycling credit note scheme announced in the Union Budget. Additionally, the upcoming enforcement of the International Maritime Organisation’s Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (HKC) on 26 June is expected to boost their prospects. Under the credit note scheme, fleet owners will receive a credit equivalent to 40% of the scrap value of a ship being dismantled in an Indian ship breaking yard. This credit is reimbursable against the construction costs of a new vessel at an Indian yard, incentivizing fleet owners to invest in new ships through Indian shipbuilders.
In anticipation of green recycling practices, 115 ship recycling yards in Alang have upgraded their facilities to comply with the IMO’s HKC. This strategic move aligns with the global shift towards environmentally conscious ship recycling standards. By embracing these initiatives and policies, Alang aims to enhance its position as a leading hub for sustainable ship dismantling activities. The recent developments in ship recycling at Alang reflect the industry’s response to evolving market conditions and increasing environmental regulations, driving the sector towards a more sustainable future.
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