- UNCTAD has reported that 0.05% of the world’s ships by weight were made in India in 2018.
- Between 2016 and 2018, India’s share of the gross tonnage of ships recycled worldwide slid from 31% to 26%.
- Bangladesh’s rose from 28% to 47%, it has proven to be a competition for India.
- India became the fifteenth country to ratify the Hong Kong Convention in November, neither Bangladesh nor Pakistan, India’s major rivals, has ratified HKC.
According to an article published in the Economic Times, India is a blip on the global shipbuilding radar. Just 0.05% of the world’s ships by weight were made in India in 2018, according to the United Nations Conference on Trade and Development (Unctad).
Bangladesh hot on the heels of India
But when it comes to taking these ships apart at the end of their life, India is a world leader, or at least used to be, till the competition from neighboring Bangladesh became too hot to handle.
Between 2016 and 2018, India’s share of the gross tonnage of ships recycled worldwide slid from 31% to 26%, as per Unctad data, while Bangladesh’s rose from 28% to 47%. But India hopes its new Recycling of Ships Act and its recent accession to the Hong Kong International Convention (HKC) for the Safe and Environmentally Sound Recycling of Ships, 2009, will put the country back on top. The provisions of HKC are included in the new law.
Mansukh Mandaviya, Union minister of state (independent charge) for shipping, believes these recent developments will change the perception of India among global shipowners. “It will certainly give an edge to India (over Bangladesh),” he told ET Magazine in an interview. He expects India’s shipbreaking business to double in the next couple of years.
India to be benefitted by Hong Kong convention
But skeptics say taking on Bangladesh, which offers a higher price for vessels than India does, is harder than it looks. “India will benefit only after the Hong Kong Convention comes into force,” says Chetan Patel, director of Shree Ram Group, one of India’s largest ship recyclers. HKC will only be effective two years after 15 countries have ratified it. These countries will account for 40% of global merchant shipping by gross tonnage and have a combined annual recycling volume equal to at least 3% of their total tonnage. While India became the fifteenth country to ratify the convention in November, neither Bangladesh nor Pakistan, India’s major rivals, has ratified HKC.
“Though other countries are free to send vessels to Bangladesh, India’s accession to HKC and the proactive approach of recycling yards to comply with HKC as well as European Union (EU) regulations will have a positive impact,” says Mandaviya.
Cheap labor
Bangladesh offers around $410 per tonne for old vessels, compared with $360 in India, primarily because steel from recycled ships meets more than a third of Bangladesh’s steel needs, compared with 1.5% in India, according to Care Ratings. Bangladesh’s labor costs are also lower. Akhil Goyal, the senior manager, “Care RatingsNSE 3.65 %, thinks shipowners — who are under pressure from investors and activists to recycle responsibly — might be willing to give ships to HKC-compliant yards in India at a di discounted rate. But I don’t see a big rise in orders to India in the short term. Shipowners will wait for some time to see how the implementation goes,” he says.
BreakPoint
Shipbreaking in India began in Kolkata and Mumbai in the 1910s, but it was not until the 1980s that the world started seriously considering India as a destination for recycling old vessels.
It all began with the beaching of a cargo vessel in Alang in 1983. The 10 km stretch on the Gulf of Cambay in Gujarat would in the 1990s become the world’s largest ship-recycling facility. Since the turn of the century, India and Bangladesh have alternated in leading the global shipbreaking market.
The yards in Alang in Bhavnagar district have till April 2019 dismantled close to 7,900 vessels, according to the Gujarat Maritime Board. It is now responsible for 98% of total ships recycled in India, with the other centers being Kolkata and Azhikkal in Kerala. Shipbreaking activities in Mumbai’s Darukhana have almost stopped. Besides Alang, the major shipbreaking hubs in South Asia are Sitakunda in Bangladesh and Gadani in Pakistan. Though Sitakunda scraps more tonnage than Alang, the latter get more ships. In 2018, 253 vessels were recycled in India and 185 in Bangladesh, according to the NGO Shipbreaking Platform, a Brussels-based nonprofit.
Major factors in dismantling
It could take three to nine months to take apart a vessel, depending on its size and type — whether it is an oil tanker, cargo vessel or warship. There are 131 yards in Alang, employing 35,000-40,000 people directly. Since 2016, around 95 yards have voluntarily applied — and been certified — for compliance with HKC.
“Now we have the stamp of the government,” says Haresh Parmer, a ship recycler in Alang. However, he adds, it could take three-four years for HKC to come into force. Under HKC, before a ship is recycled, an inventory has to be made of all the hazardous substances on the vessel, like asbestos and heavy metals, and the recycler will have to provide a specific recycling plan. Workers have to wear protective gear and be trained in safe dismantling. Records of every recycled ship and accident have provided a specific recycling plan. Workers have to wear protective gear and be trained in safe dismantling. Records of every recycled ship and accident have to be maintained for five years.
The Alang yards, despite improvements in safety in recent years, saw 14 deaths in 2018, says NGO Shipbreaking Platform. Interviews by the Tata Institute of Social Sciences with over 100 workers in Alang in 2019 found that more than half of them have been injured at the workplace in the past year and a similar percentage do not get compensation or wages while on leave due to injuries.
A key step in improving practices
Despite being a key step in improving practices in a notorious industry, HKC has been criticized for not doing enough. “The EU regulation is a lot stricter and uses independent verifiers,” says Reinoud Pijpers, director of the International Ship Recycling Association. NGOs can also file complaints against EU-certified facilities for not following its standards, a provision is not available in HKC.
While several yards in Alang have applied for EU certification, none has received it, as the EU standards do not support the beaching method. “We encourage local authorities, particularly the Gujarat Maritime Board, as well as yard owners to continue the dialogue and cooperation with the European Commission towards enhancing the working, health and environmental standards in Alang,” says a spokesperson of the Danish shipping major AP Moller-Maersk, which has been sending vessels to Alang since 2016.
Beaching process
In beaching, which is practiced in India, Bangladesh, and Pakistan, a vessel is grounded during high tide and dismantled during low tide. This leads to oil spills, and pollutants are washed away by the tide. The safest way of recycling is on a dry dock, practiced in Europe and China, which contains toxic materials in an enclosed area.
“The Recycling of Ships Act fails to address the many harms caused by the beaching method, and even risks undermining existing Indian laws aimed at protecting workers and the environment,” says Ingvild Jenssen, director, NGO Shipbreaking Platform.
European Union certification
Though the EU makes it mandatory for European flagged vessels to be recycled in EU-certified yards, shipowners have the option of “re-flagging” them by registering them in another country, a common practice. Over 60% of vessels recycled in south Asia in 2018 were imported under “flags of convenience” like Palau, Comoros, Panama and St Kitts and Nevis, as per the NGO Shipbreaking Platform. “Developed countries will continue to do that,” says Nitin Kanakia, an Alang recycler. As long as re-flagging is not illegal, even a strict policy in western countries will not stop shipowners from looking for the best deal from shipbreakers.
Conclusion
Did you subscribe to our daily newsletter?
It’s Free! Click here to Subscribe!
Source: TheEconomicTimes
