India eyeing Bangladesh’s top spot with perks for recycling dying ships
India Unveils $454 Million Shipbreaking Incentives
India is set to invest 40 billion rupees (approximately $454 million) in incentives aimed at revitalizing its shipbreaking industry. This strategic move comes as the country seeks to reclaim market share from Bangladesh and Pakistan, which currently dominate the sector. The Indian government plans to roll out these financial benefits over a decade, starting in 2026, with cabinet approval expected by the end of September.
Incentives to Boost Shipbreaking Sector
The proposed incentives will include a credit note equivalent to about 40% of the scrap value of ships for owners who bring their obsolete vessels to India. This promissory note, valid for three years, can be utilized for purchasing ships built domestically. Additionally, ship owners will have the flexibility to combine multiple credit notes in a single transaction or sell them, enhancing the appeal of the program.
India’s shipbreaking industry accounted for one-third of global ship dismantling in 2023, trailing only behind Bangladesh, which held a 46% market share. The Indian government aims to strengthen its position in this competitive market, particularly as the country is home to Alang, the world’s largest ship graveyard, which handles 98% of India’s shipbreaking business. However, the industry has faced challenges from neighboring countries, which have increasingly attracted business due to their abundant and inexpensive labor.
Recent months have seen a resurgence in shipbreaking activities in India, following a downturn caused by reduced scrapping of oil tankers after Russia’s invasion of Ukraine. Geopolitical tensions have led to the rerouting of vessels and increased freight rates, prompting shipowners to extend the operational life of aging vessels. In response to these dynamics, India is also exploring the establishment of a shipbreaking facility on its east coast to further divert business from Bangladesh.
Maritime Development Fund on the Horizon
In addition to the shipbreaking incentives, Prime Minister Narendra Modi’s government is poised to approve a 250 billion-rupee maritime development fund this month. This fund aims to promote shipbuilding within India, reducing reliance on foreign-built vessels. Announced in February as part of the federal budget for the fiscal year ending March 2026, this initiative reflects India’s commitment to enhancing its maritime capabilities and fostering domestic industry growth.
As the Indian government prepares to implement these measures, the shipping ministry and the Press Information Bureau have yet to respond to inquiries regarding the proposed incentives. The upcoming changes signal a significant shift in India’s approach to the shipbreaking industry, with the potential to reshape its competitive landscape in the region.
