India's ship recycling industry set for significant growth by 2025

Further, according to CareEdge, India accounts for 33 per cent of the global gross tonnage dismantled in 2023, second only to Bangladesh, which handled 46 per cent as detailed in a report by the Press Trust of India. "India's ship recycling Industry is poised for major growth in CY25 and is expected to witness similar recycling level in CY24 with an estimate of 2.3 to 2.6 million GT, thereafter a jump to over 3.8 to 4.2 million GT in CY25," said Sajani Shah, Assistant Director at CareEdge.

Further, according to Shah, countries having better infrastructure and green recycling facilities are expected to attract a larger portion of ships in future. India's share in the global recycling industry remained around 27 per cent in the past, before increasing to around 33 per cent in CY22 and CY23, reflecting a rise in its contribution amidst global declines. In terms of volume, in CY22 and CY23, India dismantled 2.26 and 2.47 million GT, respectively, CareEdge said.

Ship recyclers are supported by favourable financial structure owing to low debt levels in lower ship recycling activities, low fixed overheads and contract-based employees in the operations. Further, Convergence of factors such as stability in freight and steel scrap prices with expected increase in availability of obsolete ships implies ship recycling activity will rise going forward, it said.

It also said that decline in global ship-recycling activities combined with stable addition in shipping capacity in recent years highlights the growing number of obsolete vessels still in operation. As newer, more efficient vessels are introduced, older ships become increasingly unviable for operation. This trend creates a rising need for ship recycling, as operators seek to retire aging vessels that are no longer economically feasible to maintain, the ratings agency stated.

India's ship-recycling industry is a crucial part of the global maritime sector with the top four countries -- Bangladesh, India, Pakistan, and Turkey -- dominating the ship-recycling industry, dismantling over 90 per cent of the global ship recycling volume, according to ICRA. In India, Alang in Gujarat is among the largest ship recycling facilities in the world with over 140 recycling yards.