The Hindu : National : Slow death for ship-breaking industry

Online edition of India's National Newspaper
Monday, Mar 06, 2006

National

National

Slow death for ship-breaking industry

Manas Dasgupta

Appeals to both the Central and Gujarat governments for tax concessions have fallen on deaf ears

ALANG: Twenty-three years of apathy and negligence has taken its toll on the Alang ship-breaking yard in Bhavnagar district of Gujarat. The once-flourishing industry is slowly dying unable to compete with China, smaller neighbours such as Pakistan and Bangladesh and with upcoming Netherlands.

The `Clemenceau' controversy has put Alang, on the Saurashtra coast, once again on the shipping map of the world, with the focus on what is ailing the industry. The reasons are not far to seek. Since its inception in 1983, ship-breakers, the Gujarat Government and the Centre treated the industry only as milch cattle and did not take any efforts for the industry's progress.

According to an estimate, between 1994 and 2004, when Alang was at its peak, the State-owned Gujarat Maritime Board (GMB) earned Rs. 468 crore by renting out ship-breaking plots, the State Government over Rs. 1,000 crore through sales tax and the Centre about Rs. 8,000 crore in customs duty and excise. Individual owners of the plots too made good profit. But not a penny was ploughed back by any of the authorities concerned or the plot owners for development of infrastructure.

Creating facilities

The GMB has now waken up to the reality and has created landfill facilities for handling waste materials, including dumping of hazardous waste such as asbestos. The first pit for the collection and safe disposal of about 43,000 tonnes of hazardous asbestos and glasswool is waiting to be commissioned at an uninhabited, demarcated dumping zone adjacent to the ship-breaking yard. Until now, ship-breakers transported the hazardous material meant for disposal by road in totally unsafe condition to units in the thickly-populated Naroda locality in Ahmedabad, about 225 km away. This led to the campaign against Alang's ability to handle hazardous asbestos.

The ship-breakers' plea to both the Central and the State Governments for tax concessions and restoration of competitive capacity has fallen on deaf ears. Neither the Union budget nor the State budget announced this week reflect the Government's concern to save the industry.

For about a decade and half, Alang was home to more than 48,000 migrant labourers, mostly from Orissa, Bihar and Uttar Pradesh. Another one lakh people worked in the ancillary industries, transport units and shops. The last steel rolling mill in Bhavnagar closed down in 1983, but Alang helped develop 106 re-rolling mills, 102 industrial gas manufacturing units and about 3,000 small scale industrial units.

Now, most of the labour colonies wear a deserted look. Most of the re-rolling mills have closed down. Many small-scale units, including industrial gas manufacturing firms, have downed their shutters. There is activity only in about 20 of the 173 plots meant for small ships and oilrigs, providing jobs to less than 4,000 labourers. Other plot owners have either gone into hibernation or have switched over to other business. However, they wait anxiously for the good times to return. Shop-owners selling material recovered from the dismantled ships complain that the supply has dwindled to less than 10 per cent of what it was even three years ago; the buyers feel deprived of quality material at a bargain price.

The decline

The number of ships dismantled in the world's largest ship-breaking yard went up from 45 in 1989-90 to 355 in 1997-98. It slumped to about 50 in 2004-05. Reasons: The high and multiple port charges and unfavourable duty structure compared to those in neighbouring countries, bad publicity caused by environmentalists and other non-government organisations, numerous tax concessions to new steel units in the earthquake-ravaged Kutch district and the GMB's unclear policy about the renewal of lease of the ship-breaking plots, according to Nitin Kanakiya, joint secretary, Ship Recycling Industries Association.

Mr. Kanakiya said India charged two per cent more in basic customs duty and one per cent more in Central taxes than the taxes levied in the neighbouring countries.

In the domestic market, the Government's humanitarian gesture in giving tax concession for the reconstruction of the earthquake-ravaged Kutch district has made the re-rolled steel produced in the breaking yard costlier.

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