India Eyeing Bangladesh's Top Spot With Perks For Recycling Dying Ships
India is planning 40 billion rupees ($454 million) in incentives to bolster its shipbreaking industry, people familiar with the matter said.
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In 2023, India handled one-third of global ship dismantling operations
India is preparing to implement 40 billion rupees ($454 million) in incentives to strengthen its shipbreaking industry, according to sources familiar with the matter. This initiative aims to reclaim market share from industry leaders Bangladesh and Pakistan.
The financial benefits will be distributed over a ten-year period beginning in 2026, with the central ministers' cabinet expected to approve the plan by late September, according to those with knowledge of the situation who requested anonymity as the information remains confidential.
The incentive package includes a credit note valued at approximately 40% of a ship's scrap value for owners who bring their end-of-life vessels to India. This promissory note will remain valid for three years and can be applied toward purchasing ships manufactured in India. Additionally, ship owners will have the flexibility to combine multiple credit notes for a single transaction or sell them to others.
This financial stimulus is designed to enhance India's position in the global ship recycling market. According to government data, India processed 33% of worldwide ship dismantling in 2023, second only to Bangladesh's 46% market share.
Inquiries sent to India's shipping ministry and the Press Information Bureau regarding these proposed incentives have not received immediate responses.
Asia's third-largest economy hosts the world's largest ship graveyard at Alang on its western coastline, which attracts 98% of India's shipbreaking business. However, neighboring countries Bangladesh and Pakistan have been steadily capturing portions of India's market share in this labor-intensive industry that depends on abundant and inexpensive workforce.
Nevertheless, the sector has experienced an upswing in recent months following years of recession caused by decreased scrapping of oil tankers after Russia's invasion of Ukraine. Recent geopolitical disruptions necessitated rerouting of various vessel types and increased freight rates, encouraging shipowners to extend the operational lifespan of their aging vessels.
Furthermore, India is evaluating the potential establishment of a shipbreaking facility on its eastern coast to attract business away from Bangladesh, according to sources.
Prime Minister Narendra Modi's administration is also poised to approve a 250 billion-rupee maritime development fund this month to boost domestic shipbuilding and reduce reliance on foreign-manufactured vessels. This fund was initially announced in February as part of the union budget for the fiscal year ending March 2026.