पत्तन,पोत परिवहन और जलमार्ग मंत्रालय
Ministry of Ports, Shipping and Waterways
Government of India

The following  important policies have been  formulated by  Ministry of Shipping since 2015-16 in Shipbuilding and Ship-repair Sector.

2.1 The Financial Assistance Policy (FAP), approved by the Union Cabinet on 09.12.2015 , is applicable to Indian shipyards for 10 years for shipbuilding contracts secured between 01.04.2016 and 31.03.2026 (including these dates). Financial assistance will be granted to Indian Shipyards equal to 20% of the lower of “Contract Price” or the “Fair Price” or actual payments received, whichever is least . This rate of 20% will be reduced by 3% every three years.

Further details are given below:

 Under Ministry of Shipping, Government of India

• Cochin Shipyard Limited, Kochi
• Hooghly Cochin Shipyard Limited – a joint venture of HDPEL and CSL

 Under Ministry of Defence, Government of India

• Mazagaon Dock Limited, Mumbai
• Garden Reach Shipbuilders and Engineers Limited, Kolkata
• Goa Shipyard Limited, Goa
• Hindustan Shipyard Limited, Visakhapatnam

Under the control of State Governments

(i) Under Government of Gujarat

• Alock Ashdown Co. Ltd.

(ii) Under Government of West Bangal

• Shalimar Works Limited, Kolkata.

Policy regarding Right of First Refusal to Indian shipyards in shipbuilding and ship repair approved by the Union Cabinet on 09.12.2015- all government departments or agencies including PSUs have to provide Right of First Refusal to Indian shipyards while procuring or repairing vessels meant for governmental or own use till 2025 after which only Indian shipyards would build and repair such vessels for above mentioned organisations.

In case of a standard vessel, the fair price of the underlying vessel as on the date of Contract will be derived by the competent authority based on international trend. In case of specialised vessels, and, vessels other than standard or specialised vessels, fair price will be the lowest of the prices, as on the date of Contract, as are determined by three approved International Valuers listed in Schedule–III of the guidelines. Only those vessels, which are constructed and delivered within a period of three years from the date of Contract, shall be eligible for availing financial assistance under the policy. However, in case of specialized vessels, the competent authority may grant in principle approval for construction and delivery of such vessels within a specific period even beyond the aforesaid three years, but not exceeding six years. Following vessels are excluded from financial assistance policy: (a) Vessels built for Indian buyer or ship owner, which are less than 24 meters in length, except classed*dredgers of length of 10 m and above(registered length / rule length as shown in the registry certificate / tonnage certificate).However, for export orders minimum 24 m length restriction is not applicable; (b) Vessels made of wood irrespective of their lengths; (c) Vessels built for defence purposes or for use by Navy or Coast Guard and (d) Vessels built under contracts secured on nomination basis from the Central or State Government or their agencies except those secured from the Central or State Public Sector Enterprises. The scheme is being implemented by DG(S) through a web portal through which shipyards have to apply online as per the guidelines which are uploaded on website of Ministry of Shipping. A copy of the consolidated and further amended Guidelines, February, 2019, for Shipbuilding Financial Assistance Policy has been provided at

http://shipmin.gov.in/showfile.php?lid=2840

Grant of Infrastructure status to Indian shipyardsThe Department of Economic Affairs has notified the inclusion of standalone ‘Shipyards’ in the Harmonized Master List of Infrastructure Sub-sectors on 13.04.2016

Guidelines regarding RoFR  were uploaded on website of this Ministry on 31.05.2016. Subsequently, a few provisions of the guidelines regarding Quay Length and Non-Destructive Testing facilities have been modified by this Ministry to facilitate more Indian shipyards including small shipyards to take advantage of this policy. The modified guidelines have been uploaded on website of Ministry of Shipping in February, 2019.  A copy of the amended Guidelines for Evaluating and Awarding Tenders for Shipbuilding and a copy of Guidelines for Ship repair works floated by Government Department or agencies including Public Sector Undertakings have respectively been provided at

http://shipmin.gov.in/showfile.php?lid=2831 and http://shipmin.gov.in/showfile.php?lid=2295

As a follow up of  DIPP order regarding public procurement-Make in India dated  15.06.2017 and 28.05.2018, Ministry of Shipping has issued a Make in India Notification No. 1 on 31.08.2018 for prescribing the local content regarding certain components in  shipbuilding.

Additions as mentioned above:

Infrastructure status is expected to enable   shipyards  to avail flexible structuring of long term project loans, long term funding from Infrastructure Funds at lower rates of interest and for a longer tenure equivalent to the economic life of their assets, relaxed ECB norms, issuance of infrastructure bonds for meeting working capital requirements.

The financial stress which the standalone shipyards are experiencing are expected to be eased substantially.

SHIP RECYCLING IN INDIA

India is a leading destination for recycling of end of life ships. During 2018, around 25% of global ship recycling happened in India. Ship recycling takes place mainly at Alang-Sosiya in Gujarat.  Ship breaking is also carried out in a limited manner at Kolkata Port, Mumbai Port and at Steel Industrials Kerala Ltd, Kannur.  but it is  restricted to vessels upto overall length  of 157 meters. Small ships varying from 375 LDT to 2375 MT are taken up for breaking in Kerala also. Ship breaking takes place at Mumbai also, where Mumbai Port Trust has restricted beaching/breaking of the Chemical Tankers, POL Tankers, Passenger Vessels, Reefer Vessels and Fishing Trawlers at ship breaking plots, below 1000 LDT. Ship recycling is regulated under the Shipbreaking Code (Revised), 2013.

2. The approximate ship breaking capacity available in the country with the public and private sector is about 4.5 Million LDT.  Details of ships dismantled at Indian dismantling facilities during last 5 years, as reported by ship recycling centres, are as follows:

3. Salient features of Alang-Sosia Ship Recycling Yard: Alang is a coastal town in Bhavnagar district in the Indian state of Gujarat. Alang-Sosia Ship Recycling Yard, one of the largest ship-recycling yards in the world. The shipyards at Alang recycle approximately 30% of the volume of ships recycled around the world. 

4. Operations in Alang recycling yard started in 1982 and today it is one of the choicest ship-recycling destinations for the ship owners around the world. The longest ship ever built, MV Seawise Giant, was beached there for demolition in December 2009. Alang accounts for nearly 90% of the ships broken in India, with other centers located in the states of West Bengal, Andhra Pradesh, Kerala, Tamil Nadu, and Maharashtra. Noting its level of compliance, its past development, in addition to proposed expansion, Alang represents the Indian image of ship recycling.

5.Though it is the largest one, still  in order to boost this recycling industry, Alang Ship Recycling has undergone continued efforts and has been adopting a ‘best practice approach’ to strengthen in the areas of infrastructure, regulations, health and safety, environmental aspects, economics and marketing, and thus to contribute to almost one third of the global ship recycling volume.

6. Upgradation of Alang-Sosia Ship Recycling Yard

GMB have finalised a project for upgradation of environment management plan at Alang-Sosiya ship recycling yards at a total cost of US $ 111.24 million, with financial assistance in the form of soft loan of US$ 76 million from Japan International Cooperation Agency (JICA).

6.1    JICA project has following components:

• Upgradation of 70 yards by providing impervious floors to prevent pollutants in sub-soil.

• Improvement of existing Environmental Facility (ETP, Incinerator and Oil Recovery systems etc).

• Introduction of Mobile Decontamination Unit (Pollution Response Equipment).

• Introduction of Large Mobile Cranes and Beach Cleaning Wheel Loaders.

• Introduction of Tank Cleaning Barge and construction of Jetty

• Introduction of Multipurpose Vessel.

7.                 Shipbreaking Code (Revised), 2013

The ship-recycling industry is a labour-intensive sector, but it is susceptible to concerns on environmental safety.; The Hon'ble Supreme Court of India, while disposing the petition of M/s Research Foundation for Science Technology and Natural Resource Policy, dwelt into the need to regulate the ship recycling industry from environmental point of view.  On the directions of the Hon'ble Supreme Court in March, 2006, the Ministry of Environment and Forests constituted a Committee of Technical Experts (CTE). The Committee, after a very elaborate and detailed study of the problems faced by the ship recycling industry, submitted its report suggesting various norms and solutions. The. Hon'ble Supreme Court, accordingly, directed the Union of India to formulate a comprehensive code incorporating the recommendations made by the Committee. In compliance with the Supreme Court directive, the Ministry of Steel, which was then the administrative ministry for ship-recycling, formulated a comprehensive Shipbreaking Code, 2013 in the form of an executive order to regulate ship recycling in India, which was published in the gazette. The Shipbreaking Code was comprehensively revised in 2017 and published as Shipbreaking Code (Revised), 2013. The Code lays down comprehensive procedures and requirements for the entire process of ship recycling, to ensure safe and environmentally sound ship recycling and proper disposal of hazardous bye products of ship recycling.

8. Ratification of Hong Kong Convention

In the year 2009, the International Maritime Organization (IMO) adopted the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (HKC), which is aimed at ensuring that ships, when being recycled after reaching the end of their operational lives, do not pose any unnecessary risk to the environment and to human health and safety. The HKC lays down the multilateral framework to be followed internationally by countries which become a party to it.   The HKC differs from the Shipbreaking Code (Revised), 2013, in the following manner:

• The Convention does not apply to ships of less than 500 GT, ships which operate throughout their life only in waters within the jurisdiction of a Party, any warships, naval auxiliary, or other ships owned or operated by a Party and used, for the time being, only on government non-commercial service. The Shipbreaking Code (Revised), 2013 does not, however, make any such distinction and applies to all categories and classes of ships.
• The Convention provides for Inventory of Hazardous Material for new ships and, five years from its coming into effect, for all existing ships. The Convention also provides for survey of ships for issue of Certificate of Inventory of Hazardous Material. The Shipbreaking Code (Revised), 2013 does not have provisions for such survey and certification of ships.
• The Convention requires a Ready for Recycling Certificate, which will be an international certificate to be carried by all ships which are meant for recycling. The Shipbreaking Code (Revised), 2013 does not require such an international certificate.
• The Convention mandates that recycling facilities shall be authorized by the respective authorities in that country and all ships shall be recycled only in such authorized recycling facilities.  The Shipbreaking Code (Revised), 2013, being a national regulation, is not a multilateral instrument legally binding on ships of foreign flags.
  1. Those provisions of the HKC which are not covered in the Shipbreaking Code, 2013, are proposed to be incorporated into the domestic legislation to make Indian standards  completely compliant with HKC, so that India may become a party to the HKC and reap the benefits of so becoming a party. The following benefits are anticipated as a result of acceding to the HKC: The Convention is a legally binding instrument which ensures that the process of ship recycling does not pose risks to human health, safety and to the environment.

The Convention enables protection of human health and the environment by minimizing hazardous waste production to the least amount possible, making use of an integrated life-cycle approach, which involves firm controls over the generation of hazardous waste to its storage, transport, treatment, re-use, recycling, recovery and final disposal.

The Convention adopts a life-cycle approach and deals with hazardous materials installed in ships from cradle to grave and aims at banning and limiting their use by regulating design, construction, operation and maintenance of ships. Management of Inventory of Hazardous Material during the entire life-time of the ship is a major step in achieving safe and environmentally sound ship recycling. The “cradle-to-grave” approach limits use of hazardous materials on board and requires ships to carry an inventory of such materials’ which are crucial steps forward in the direction of cleaner shipping and ship dismantling

The Convention mandates the establishment of a mechanism to ensure that any ship recycling facility is authorized for ship recycling and is designed, constructed and operated in a safe and environmentally sound manner, in accordance with the regulations of the Convention.

The Convention aims to set minimum standards, without specifically defining the method to be followed for ship recycling. The Convention has left it to Party states to decide which method of ship recycling is safe and environmentally sound. It could be pier breaking, slip way, dry dock, beaching or any other method which complies with the requirements of the Convention.

The Convention requires ship recycling facilities to take preventive measures against adverse effects to human health and the environment caused by unsafe conditions, accidents, spills, emissions, etc., to ensure safe and environmentally sound management of hazardous materials, and  to develop and maintain an emergency preparedness and response plan in order to deal with emergency situations.

The Convention provides a multilateral legal framework to enable the Party State to require compliance of the provisions of the Convention by foreign flag ships.

The ship recycling industry is growing rapidly. In view of the current over supply of vessels and the anticipated redundancies due to stricter emission norms January, 2020 onward, it is estimated that in the near future hundreds of ships would require to be disposed. At present, the ship recycling industry is predominantly based in South Asia. India becoming a party to the Convention is expected to enable a competitive edge among other ship-recycling countries of South Asia. An increase in the recycling business would lead to economic benefits, including in terms of an increase in employment generation.

8.2 It has been decided in principle to accede to the Hong Kong Convention. A draft Recycling of Ships Bill, 2019 has been drafted to provide legislative background for implementation of the provisions of the HKC. Draft Cabinet Note and Draft Bill are currently under process and have been circulated for inter-ministerial consultations. 9. With the implementation of JICA project and ratification of HKC, the country is likely to become prime destination for green ship recycling and the ship recycling volume in the country is expected to double by 2024.