The Centre is accelerating plans to transform Gujarat's Alang into a globally competitive green ship recycling hub, aiming to raise India's share of the global ship recycling market from the current 35.4% to nearly 50% over the next decade through investments of ₹20,000-25,000 crore, according to two people aware of the plans.
The strategy comes as global shipowners, particularly in Europe, increasingly prefer environmentally compliant recycling facilities, making sustainability standards a key criterion for deciding where ageing vessels are dismantled.
Green overhaul
The proposed investment would nearly double Alang's recycling capacity from 4-4.5 million light displacement tonnes (LDT) to around 9 million LDT through yard expansion and infrastructure upgrades, one of the persons cited above said.
The Gujarat government is expected to invest more than ₹1,000 crore, while the Centre and private recyclers will contribute the remaining amount over the next few years.
The Centre has already earmarked about $8 billion to support India's shipbuilding and ship recycling ecosystem, with more than a quarter of that expected to be directed towards expanding recycling infrastructure at Alang, the second person said.
Projects will also be eligible for financing through the ₹25,000-crore Maritime Development Fund (MDF), comprising a ₹20,000-crore investment fund and a ₹5,000-crore interest subvention facility announced last year.
The revamp is being driven by the implementation of the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (HKC), which entered into force globally this year.
The Centre has released ₹53.5 crore from the Ferrous Scrap Development Fund to help Alang yards upgrade infrastructure and meet international environmental standards.
"As many as 115 of Alang's 128 plots are now HKC compliant," shipping secretary Vijay Kumar told Mint in an interview.
However, industry executives cautioned that simply adding capacity may not be enough. Nitin Kanakiya, partner at Triveni Shipbreakers LLP, said Alang's capacity utilization has been declining for years due to weaker competitiveness against Bangladesh and Pakistan. He attributed this largely to lower demand for value-added re-rolled steel plates after the 2014 BIS Quality Control Order, arguing that boosting demand should precede any major capacity expansion.
Global standards
The next milestone is securing certification under the European Union Ship Recycling Regulation (EU-SRR), which is mandatory for dismantling many European-owned vessels.
According to Kumar, 34 Alang yards have applied for EU certification, while inspections have already been completed at three facilities, enabling them to seek inclusion on the EU's approved recycling list.
India and the European Union reaffirmed their commitment to strengthen cooperation on sustainable ship recycling—including facilitating the inclusion of Indian facilities under the EU-SRR—during a meeting this week between Union minister for ports, shipping and waterways Sarbananda Sonowal and European Commissioner for Environment, Water Resilience and a Competitive Circular Economy Jessika Roswall.
The expansion is expected to increase India's annual ship recycling capacity from 500-600 vessels currently to around 1,000-1,200 ships over the next decade. The ministry estimates that Alang alone could recycle nearly 16,000 vessels during this period.
To encourage domestic recycling, the government has operationalized a ₹4,000-crore Shipbreaking Credit Note Scheme under the Shipbuilding Financial Assistance Policy. The first credit note, equivalent to 40% of the scrap value of a recycled ship, was issued in May this year.
Kumar said the modernization of Alang is central to India's broader maritime strategy of creating an integrated ecosystem spanning shipbuilding, repair and recycling.
Market opportunity
With environmental compliance increasingly becoming a commercial requirement rather than merely a regulatory obligation, officials believe Alang's transformation could significantly strengthen India's position in the global maritime value chain.
According to the Baltic and International Maritime Council (BIMCO), more than 16,000 vessels are expected to be recycled worldwide over the next decade, presenting a significant opportunity for India, already the world's largest ship recycling destination by market share.
"India's next big opportunity in ship recycling is to create proper legal and regulator-approved channels through which ageing sanctioned or dark-fleet-linked vessels can be brought to compliant Indian yards for recycling," said a spokesperson for GMS, the world's largest cash buyer of ships and offshore assets for recycling.
“With the right approvals, traceability, payment safeguards and environmental standards, India can capture this tonnage responsibly and strengthen its global leadership.”
Japanese shipping major Mitsui O.S.K. Lines (MOL) said international certifications alone would not be sufficient.
"We envision a ship recycling yard that not only holds HKC and EU-SRR certifications but also consistently demonstrates high standards of safety, environmental management, governance and human rights protection in practice," a company spokesperson said.
Beyond compliance
Industry experts said the next phase of Alang's evolution must extend beyond regulatory compliance.
"Expansion of Alang is a welcome step, but India must also build expertise in recovering high-value components from modern vessels and gradually transition from the traditional beaching method to more environmentally sustainable recycling technologies," said Kuljit Singh, partner and national infrastructure leader at EY India.
Pushpank Kaushik, chief executive and head of business development for the Indian subcontinent, Middle East and Southeast Asia at Jassper Shipping, said sustained policy support would improve India's competitiveness.
"For an industry that has historically operated on thin margins and informal practices, this level of institutional backing gives Alang the credibility it needs to compete with recycling hubs in Europe and East Asia while retaining jobs and material recovery within India," he said.
Danish shipping giant Maersk declined to comment. Germany's Hapag-Lloyd did not respond to queries until press time. A query sent to the Gujarat government also remained unanswered.