India Dominates Ship Recycling With 35.4%

India Dominates Ship Recycling With 35.4% Global Share

India captured over one-third of global ship recycling in 2025, beating a Maritime Vision target five years early—but faces stiff cost pressure from rivals.

The Hindu reported on June 22 that India increased its share of global ship recycling to 35.4% in 2025, up from 30.1% the year before. The country recycled 2.99 million gross tonnes of vessels—a nearly 60% jump from 1.86 million tonnes in 2024—achieving a goal under the Maritime India Vision 2030 five years ahead of schedule.

The acceleration reflects deliberate policy architecture. India's Ministry of Ports, Shipping and Waterways implemented the Recycling of Ships Act, 2019, aligning yards with the Hong Kong International Convention for safe and environmentally sound ship dismantling. The government invested nearly ₹53.5 crore ($6.4 million) to modernize 115 recycling facilities, while the newly operationalized Ship Recycling Credit Note scheme—issued for the first time in mid-June 2026—offers shipowners tradable credits worth 40% of scrap value, redeemable for up to 5% of the price of new vessels built in Indian yards. Anantam IAS noted India is the first country globally to operationalize such a credit system within the Hong Kong framework, directly linking green recycling to domestic shipbuilding.

Why India Won Market Share

The market advantage stems from infrastructure scale and regulatory credibility. Alang-Sosiya in Gujarat, handling nearly 98% of India's recycling volume, has emerged as the world's largest ship recycling cluster. Shipping Inbox documented that India now boasts around 115 Hong Kong Convention-compliant yards—most in Alang—with upgraded hazardous-waste systems, impermeable flooring, and formalized worker-safety protocols.

The timing is strategic. With over 16,000 vessels expected to reach end-of-life over the next decade, the European Commission's newly unveiled Industrial Maritime Strategy explicitly recognized India as a key partner in responsible ship recycling, signaling that EU shipowners facing decarbonization pressure and ageing fleets will need compliant yards. India's yards are positioning for EU approval lists, effectively capturing the premium market for vessels that cannot legally go to non-compliant sites.

The Pressure Play

Yet the 35.4% figure masks vulnerability. Al Jazeera documented in December 2025 that compliance costs—each yard invested $0.56–1.2 million—have forced Indian yards to offer lower scrap prices (roughly $500–510 per light displacement tonne) than unregulated competitors. Bangladesh's Chattogram port and Pakistan's Gadani yard offer $540–550 and $525–530 per tonne respectively. Result: Indian vessel throughput fell from 166 ships decommissioned in 2023 to 124 in 2024, while Turkey's volume nearly doubled and Pakistan's more than doubled.

The share grew despite declining volumes because other yards contracted more sharply. India consolidated dominance through regulation and state investment, not raw competition on price. The credit note scheme is designed to flip that—by making recycling at compliant Indian yards cheaper for owners buying new ships domestically, it keeps the entire value chain in-country rather than fighting on scrap-steel margins alone.

What to Watch

The decisive moment arrives in 2027. The Hong Kong Convention will enter universal force globally, tightening licensing requirements for all yards and theoretically eliminating India's regulatory edge. Watch whether EU approval lists materialize and whether enough shipowners choose compliance over cost. If they do, Indian yards absorb volume from unregulated sites and justify past capex. If not, margins compress further and Alang's capacity expansion to 9 million light displacement tonnes becomes stranded investment. The first test: how many of the 150+ vessels expected to arrive in Indian yards over the next 18 months come from EU-regulated or premium fleets vs. offshore registries chasing the lowest bid.