Government Unveils Ship Recycling Credit Note Scheme
In a significant move to bolster the shipbuilding industry, the Indian government has introduced a new credit note scheme for ship recycling. This initiative, part of a ₹69,725 crore package approved by the Union Cabinet, allows shipowners to sell credit notes accrued from scrapping vessels. The scheme aims to enhance local shipbuilding and promote environmentally friendly practices in ship recycling.
Details of the Credit Note Scheme
The newly announced credit note scheme provides a financial incentive for shipowners who choose to recycle their vessels in India. Under this initiative, fleet owners, whether Indian or international, will receive a credit note equivalent to 40% of the scrap value of a ship dismantled at an Indian recycling yard. This credit can then be used to offset the cost of constructing a new vessel at an Indian shipyard.
R. Lakshmanan, Joint Secretary of the Ministry of Ports, Shipping and Waterways, explained that shipowners have the flexibility to aggregate credit notes from multiple ships to purchase a larger vessel. Additionally, if a shipowner opts to scrap a vessel in India but does not intend to build a new ship locally, they can sell their credit note to another party interested in constructing a ship in India. This provision is designed to ensure that the benefits of the credit notes are utilized effectively within the Indian shipbuilding sector.
To encourage timely use of these credits, the government has established a three-year time limit for their utilization. The initiative is expected to stimulate the ship recycling business, particularly in Gujarat’s Alang, which is known for its extensive shipbreaking facilities. With a projected demand for over 50,000 new ships in the coming decades, driven by a global shift towards greener technologies, this scheme is poised to have a significant impact on local shipbuilding and recycling operations.
Impact on the Shipbuilding Industry
The introduction of the credit note scheme is anticipated to have a cascading effect on the Indian shipbuilding industry. The government has allocated ₹4,001 crore specifically for shipbreaking credit notes, signaling its commitment to enhancing this sector. By incentivizing ship recycling, the scheme aims to not only support local shipbuilders but also promote sustainable practices in the maritime industry.
As the demand for retiring older ships increases, the credit note scheme is expected to attract more shipowners to utilize Indian recycling yards. This could lead to a surge in business for facilities like those in Alang, which is already recognized as the world’s longest stretch of shipbreaking beaches. The initiative aligns with global efforts to reduce emissions and transition towards greener technologies, making it a timely and relevant development for the industry.
Overall, the credit note scheme represents a strategic effort by the Indian government to revitalize the shipbuilding sector while promoting environmentally responsible practices in ship recycling.
