Taxes, duties burden Alang, Sosiya
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Taxes, duties burden Alang, Sosiya

While Alang is gasping for survival, B'desh, Pak and China are emerging as homes to major ship breaking yards.

india Updated: Feb 08, 2006 11:00 IST

Hit by hefty custom and excise duties and other taxes, Alang and Sosiya ship breaking yards, considered to be among the biggest in the world, are fast losing out business to Bangladesh, Pakistan and China.

The ship breaking yard comprises a total of 173 plots along necklace shaped beach of Alang, which has been leased out by the Gujarat Maritime Board, the controlling authority of the ship-breakers.

At the peak of activity here as many as 150 plots are in operation, serviced by an estimated 35,000 workers, majority of them migrants.

Since the yard started functioning in 1983, more than 4,000 vessels have been dismantled here representing over 27 million LDT (Light displacement tonnage--the net weight used to calculate scrap value).

In the 1990s the yard accounted for 90 per cent of the total ships broken in the world.

But now the number of ships coming to the yard has drastically come down mainly due to heavy duties levied and also, partly, due to frequent protests by environmental groups who have been opposing the entry of the asbestos laden ships in the Indian shores, according to ship-breakers.

The best years for the shipyard were 1996 to 2000 when most of the ship breaking plots were busy dismantling ships. In 1997 it broke 348 ship when it was at the peak of operations. Now most of the plots are empty. Last year it broke only 52 ships.

While Alang is gasping for survival, it is Bangladesh, Pakistan and China which are emerging as homes to major ship breaking and recycling yards.

"If this trend is not reversed then the day is not far when the ship-breakers will be forced to completely close down their business, rendering a large number of people jobless," said Mukesh Patel of Shriram Vessel and Scrap Pvt Ltd, the company which has purchased the controversial decommissioned French aircraft carrier Clemenceau.

A major concern for the ship breakers is the fact that they have to pay five per cent custom duty and 16 per cent excise duty which is quite high as compared to the duties levied in other countries such as Bangladesh, Pakistan and China.

M Shah, a ship breaker said "another problem that is plaguing the industry is the inordinate delay of getting the the ships cleared by the Gujarat Pollution Control Board (GPCB) after they have been purchased by the ship.

"We buy the ship, bring it to the shore for breaking, but inspection by GPCB takes as much as a month which shoots up the interest burden," he rued.

A spokesman of the Gujarat Maritime Board, meanwhile, said the GMB has sent a draft proposal to the government to take various measures to save the ship breaking industry by reducing custom duty and other charges.

Sanjay Shah Director of MCC Shipping and Supply Services Pvt Ltd at Alang said "this region which falls in Bhavnagar district of Gujarat has only two main industries -- Diamond polishing industries and Ship-breaking industries. But now both are in doldrums.

"While the diamond polishing units have shifted mainly to Surat, the ship-breaking industries are facing the onslaught of steep duties and opposition from the environmental NGOs."

"The shipping companies are not ready to send ships to India for breaking which is gradually affecting the economy of this region and the people living here," said Shah.

As a result a number of steel rolling mills, foundaries, scrap shops and many other industries that survive on ship scrap as raw material are suffering. "It is the mega steel companies which are out to destroy the Alang Ship breaking yards by funding the environmental NGO's," Patel alleged.

Samvardhan Trust, an NGO coming out in support of the ship breakers, said "preserving the environment is one thing, but spelling death-knell for the ship-breaking yards of Alang by opposing ships here is another."

A trustee of the NGO, Yashodhar Bhatt, said "we appeal to all sections of society like academicians, scientists, leaders in the field of industries and agriculture and government to come forward to save the dying ship breaking industries of Gujarat."

First Published: Feb 08, 2006 11:00 IST