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Home > Business > Business Headline > Report

Gujarat facing the dragon's threat

Joydeep Ray in Gandhinagar | November 21, 2003 12:06 IST

Call it yet another threat from China. The Rs 30,000 crore (Rs 300 billion) ship-breaking industry at Alang in Gujarat now faces a threat from the dragon.

"The world's largest ship-breaking yard is worried about competition from China's modern yards. Two years ago, Hamburg Sud, a German company, brought modern ship-breaking equipment to Chinese yards," says a senior member of the Alang Sosiya Ship-breaking Yard Association who does not wish to be identified.

What is more, China is now building modern graving dock facilities for recycling steel from very large crude carriers and ultra-large crude carriers near Shanghai, according to an international maritime report.

These facilities are being built in association with some major shipping and other companies (including The Peninsular & Orient Steam Navigation Company and British Petroleum), so guaranteeing a steady supply of ships for breaking.

Alang has at present 178 ship-breaking plots where more than 2.5 million tonnes of material are dismantled round the year.

"But since last two months, there has been a significant decrease in the number of ships anchoring here," says a ship breaker.

During 2002, on an average 28 ships a month anchored at Alang for breaking. The figure dropped to 21 ships this August, 23 during September, 18 during October and 15 so far in November. According to breakers, the December figure may be lower than that of November.

The member of the yard says that Alang's ship-breaking yard has to be decongested, that ship handling has to be 100 per cent mechanised (ships are currently dragged inside the yard and the steel cut manually), that the sea in the vicinity of the yard has to be regularly cleaned and that ship breakers have to switch from using oxygen and LPG cylinders to break ships (one main cause of the explosions and accidents that occur at Alang) to electric cutters, used at Chinese ship-breaking yards.

Alang is important for several reasons. The ships that are broken there provide around four million tonnes of steel for the Indian market.

Secondly, it provides employment to over 45,000 people directly and over five lakh people in the state and outside indirectly.

Thirdly, the state government levies an 8 per cent sales tax on steel plates and iron sheets and so earns roughly Rs 3,500 crore (Rs 35 billion) a year in tax revenue from Alang.

Grouses a ship breaker: "The state government earns a huge amount of money as revenue from this industry but does not bother to provide anything in return. ''

The ship-yard lacks proper infrastructure, yard members complain. The Gujarat Maritime Board, which is responsible for looking after the Alang ship-breaking yard, has been headless for the last few months.

The last Chief Executive Officer, Girish Murmu, was relieved about six months after he took charge and posted to another government department.

C L Meena, a senior IAS officer posted at another department, currently looks after GMB but hardly finds time to come down to the GMB office in Gandhinagar as he's also in charge of another department.

What is more, safety is an issue at Alang. Some 16 people, including three workers, were killed this year at the yard.

A recent report by the Vadodara-based unit of the People's Unit for Civil Liberties said that the state government has not yet considered the ship-breaking business an industry.

This should be done at the earliest and it should be brought under the Factories Act, to ensure the safety of labourers, the report said.

"Ship breaking can only be done after decontamination of the hazardous substance and a mandatory rule must be framed to compel the owners of the ship to clean their ships and ensure that tanks are gas free for hot work. With the prices of steel, the prime extract from the ship, varying on a day-to-day basis, ship breakers often flout norms to sell the scrap when prices go up. Sometime even ship-breaking guidelines are ignored and the interiors of the ship, which are normally broken down at the end of the operation, are dismantled earlier as there is good market for these products," the PUCL report by Dwwarikanath Rath, a PUCL member and social worker, said.

A member of the GMB, however, says that Alang is now going to get a major facelift as the board has decided to provide treatment, storage and disposal facilities and that these will play a pivotal role in minimising the pollution from the hazardous materials at Alang.

"We thought that it is very important to start by identifying the problem before rushing around looking for a solution. In view of this GMB has decided to commission a detailed waste management plan at Alang," the GMB member says.

GMB has procured land for creating infrastructure for waste management through proper environment impact assessment studies in conformity with Indian environmental legislation, he adds. GMB is planning major infrastructure development, including a hazardous waste management project.

A Rs 12 crore (Rs 120 million) jetty for boarding is to be constructed at the ship-breaking yard. This includes a two-lane approach road, a platform for a backup area and a piled jetty with bollards and a fendering system.

"While countries like China may have the advantages of a fairly large volume of domestic demand for shipbuilding, India can look for its advantages in terms of labour costs, which are quite competitive and compare well with those obtained in other major shipbuilding countries," says Shreyas Pandya, president of the Gujarat Chamber of Commerce and Industry.

Even so, the dragon won't go away. So chief minister Narendra Modi, in whose bailiwick Alang falls, would do well to cock an eye at the Chinese threat and push for an upgrading of Alang's facilities.

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