India: Customs Duty on Ship breaking reduces by 2.5%

In the Union Budget 2014-15 announced today by the Indian Finance Minister Mr. Arun Jaitley, custom duty on ships imported for breaking has been reduced from current 5% to 2.5%.

Budget 2014-15 brings some alterations for the ship breaking industry in Alang. It comes as a pleasant surprise for Steel & Iron industry, as the duty on imported ships used for dismantling was slashed to 2.5% .

Alang (Gujarat), which is the world’s 5^th largest ship breaking yard, will be benefited from this move as this will attract more ships to Alang for breaking from current levels of 280-290  on an annual basis supporting domestic industry which rely on Scrap generated from ship.

Indian Ship Breaking Scrap Prices as on 10 Jul, 2014

Basic prices; excluding taxes

Talking to SteelMint, Mr Nitin Kanakiya, hon’ble Secretary of Ship Recycling Industries Association Alang (Gujarat) said,

[su_quote]We welcome this decision of finance minister, as this was a long awaited decision, there was a disparity in duty on heavy melting Scrap and ship breaking from more than 10 years . The duty on the former was zero, while it was 5% on the latter. However, the duty has not been waived off completely but it has been reduced to 2.5%. [/su_quote]

Impact on the Industry

Currently, number of ships for breaking is nearly 25-30 in a month, which will be increased to 40-45 ships. There are 140 ship breaking plots in Alang, out of which only 65-70 are operative. With this move, disparity of non operative plots will be reduced and demand supply scenario is also expected to improve, which at this juncture is not encouraging.

Summary of Ships arrived for Breaking in Alang (Gujarat)