India’s Ship Recycling Industry To See 10% Growth by 2028: Report

India’s ship recycling industry is poised for substantial expansion, with an expected compound annual growth rate (CAGR) of 10% by 2028, positioning it as a key player in the global market. According to a report by CareEdge Ratings, India accounted for 33% of the global gross tonnage (GT) dismantled in 2023, placing it second only to Bangladesh, which handled 46% of global ship dismantling.

The industry is projected to grow to 3.8-4.2 million GT by 2025, up from an estimated 2.3-2.6 million GT in 2024. A major contributor to this growth is India’s robust infrastructure, particularly the Alang-Gujarat facility, one of the world’s largest ship recycling hubs with over 140 recycling yards.

India’s position in the global maritime sector is critical. Alongside Bangladesh, Pakistan, and Turkey, the country dominates more than 90% of global ship recycling activity. While contributions from other nations have been inconsistent, India has remained a steady leader in this field.

Market Insights and Future Potential

According to Sajni Shah, Assistant Director at CareEdge Ratings, several factors suggest a significant increase in ships entering the recycling market from 2025 onwards. These include the cooling-off of the Baltic Dry Index (BDI), stabilizing scrap prices, and a rise in obsolete ships. Additionally, countries with advanced infrastructure and green recycling capabilities are expected to capture a larger share of the global market in the future.

Despite the promising outlook, the industry faces challenges, particularly with fluctuating scrap prices. Prices for heavy melting scrap in Bhavnagar surged from Rs 28,800 per tonne in August 2020 to Rs 54,400 in April 2022, driven by supply chain disruptions and increased steel demand post-pandemic. By December 2023, prices had settled at Rs 39,900 per tonne, stabilizing between Rs 36,000 and Rs 44,000 per tonne throughout 2023.

The industry also grapples with safety and regulatory issues. For instance, in Bangladesh, ship recycling is often hazardous, with workers and nearby communities exposed to toxic materials that threaten their health and livelihood. This highlights the urgent need for stricter regulations and improved safety standards across the sector.

India’s ship recycling industry is set for impressive growth in the coming years, bolstered by strong infrastructure and increasing global demand. However, the industry’s long-term success will depend on implementing stringent regulations and ensuring the safety of workers and the environment. A balanced approach that prioritizes both economic development and sustainability will be key to unlocking the full potential of India’s ship recycling sector.