Business Standard – Ship recycling industry rejoice after import duty cut

(Written by Vimukt Dave)

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18 July 2014 - The ship breaking and recycling industry in Gujarat is rejoicing following the Centre’s decision to reduce the import duty on ships imported for breaking by from 5 per cent to 2.5 per cent in the recently announced Union Budget for 2014-15. The industry expects rise in number of ships imported to India for recycling.

Industry sources said high import duty and a weak rupee against dollar had diverted business to neighbouring countries like Pakistan and Bangladesh in the last two years. However, ship-breakers now believe that the reduction in customs duty will bring business back to India.

“We had been demanding reduction in import duty for quite a long time. Finally, the government has heard our voices and reduced the duty. This will surely make our industry strong and help us compete with other countries,” said Ramesh Mendapara, vice-president, Ship Recycling Industries Association of India (SRIA).

There is a duty of 2.5 per cent on import of scrap. But, the ship-breaking industry had told the Centre that ships imported are also scrap and demanded equivalent duty for ship recycling industry.

Mendapara said, “We wanted balanced duty on both scrap and ship import. Due to high import duty, selling of domestic scrap had decreased and direct import of scrap has gone up and consequently, ship import had declined in the last two years.”

An industry source at Sosiya- Alang ship recycling yard in Bhavnagar said, “Depreciation of rupee against US dollar had a negative impact on ship breaking industry. The rupee is stable now and the government’s decision will boost import of ships for recycling.”

As per data provided by SRIA, 394 ships were imported in India for recycling during 2012-13. The number went down to 298 in 2013-14 and in the current financial year, till June, 92 ships were imported for breaking. According to Mendapara, after cut in duty, industry is expecting to import 40-45 ships every month for recycling.