The rupee depreciation has compounded challenges, making raw material imports more expensive and squeezing the profit margins for domestic producers. However, while the weaker rupee made steel imports costlier, it was offset by the low base prices in countries like China, further straining the local industry.
Dual decline
The current situation in both the steel and ship recycling industries in India is unprecedented. Historically, when ship recycling supply declined, steel demand often remained robust, balancing the market. However, for the first time, both the supply of ships and demand for steel have declined simultaneously, creating a severe impact on the ship recycling industry in Alang and other hubs.
The ship recycling business relies heavily on the demand for scrap steel salvaged from the broken vessels. However, with cheaper steel alternatives flooding the market, the demand for ship-recycled steel has significantly decreased.
This downturn has rippled across the maritime logistics chain associated with ship recycling. The arrival of fewer ships for dismantling reduces the availability of recycled steel and disrupts logistical operations. The once bustling transport network of steel from Alang to re-rolling mills and other industries now faces underutilisation, leading to inefficiencies and higher costs.
Currently, only 20 percent of Alang’s 120 ship recycling yards are operational, leading to severe job losses and economic distress. The loss of employment — the number of workers has dropped from 13,500 at the peak period of this sector to fewer than 2,400 in mid-2024 — is further impacting ancillary industries, including logistics.
Course correction
To address these related challenges, the Indian government must enforce robust anti-dumping policies. The Directorate General of Trade Remedies has initiated investigations, but more stringent measures are needed to bridge the price gap between imported and domestic steel. Anti-dumping duties would provide much-needed relief to local steelmakers and help restore their competitive edge.
For the ship recycling industry, targeted interventions such as financial incentives, reduced duties on recycled steel, and retraining programs for displaced workers are essential.
Additionally, enhancing the efficiency of the maritime logistics associated with ship recycling and ensuring steady ship arrivals for dismantling can help stabilise the industry.
Without these remedies, the country’s steel and ship recycling industries risk facing long-term decline, with severe economic and social consequences, particularly in regions like Alang.
