Norms relaxed on diesel imports through old ships to promote ship breaking industry

 The Dollar Business Bureau In a deliberate move to give fillip to the ship breaking industry, the government has relaxed norms for Import of High Speed Diesel (HSD) and Light diesel oil (LDO), brought on board in the old ships/vessels for purpose of breaking. Prior to this development, state trading enterprises were taking care of such imports. On an average, oil tankers accounted for 40% of the volumes scrapped during 1993-2004. Some 250 Indian companies are involved in ship-scrapping, mostly along the Gujarat coast. The ship-breaking industry in India is likely to witness hectic activity in the next 10 years with the European Union’s proposed accelerated phase-out of single-hull tankers (20,000 to 30,000 DWT — dead weight tonnage). According to a recent study, there are more than 2,250 single-hull tankers of 5,000 DWT, or a total of 129.5 million DWT (till January 2004), that will have to be scrapped. This is 25-30 per cent higher than the estimate of peak volume of 2015. These tankers will be withdrawn by 2010 and 2015 in accordance with the strict time-tables set by the European Commission (EC) and the IMO (International Maritime Organisation). The new regulations include a ban on carrying heavy grades of oil in single-hull tankers. According to an EU-commissioned study, the ship-breaking industry’s present capacity, in Asia, and particularly India, may still be enough to meet the demand generated by the proposed accelerated phase-out. The EU Parliament and Council amended Regulation 417/2002 to phase out single-hull tankers, and the IMO followed suit. According to the study, in the past ten years decommissioning of ships has been concentrated in the Indian sub-continent and elsewhere in Asia. Ship-breaking in India, Bangladesh, Pakistan and China accounted for more than 90% of the of all vessels scrapped. Of all the vessels scrapped from 1994 to 2003, less than 2% were broken in Europe, with Turkey accounting for more than 85% of this. For instance, 4,658 ships were scrapped between 1994 and 2003. Of this 2,638 were scrapped in India, followed by Bangladesh (603), China (523) and Turkey(125). In other words, India accounted for around 60% of the global ship-scrapping, and whole of Asia 75%. The Indian Government is unable to resist ship breaking activity because Industry which also brings in 2.5 million tons of steel representing about 10% of India‘s overall steel production.    

May 25, 2015 | 9:00 am IST.