BIS mark for scrap may spoil Alang's silver jubilee party

Worried industry to take up the issue with Centre.

The steel ministry's decision to make the Bureau of Indian Standard (BIS) mark mandatory for scrap and manufacturing, sales, stock and distribution of steel may affect the Asia's largest shipbreaking yard at Alang, which is celebrating its silver jubilee this year.

At a time when there are some positive signs for the shipbreaking yard, the Centre's decision may damage the prospects of the industry, say industry sources.

As per the norms of the Steel and Steel Product Quality Control 2007, all the scrap without the BIS mark should have to be demolished within six months. Also, manufacturing, sales, stock and distribution of steel and scrap without the mark would be banned after May 13, 2008.

"The decision to make BIS mark mandatory will hit the business of the Alang shipbreaking yard. As a result, the shipbreaking yard might have to close down its shutters after May 13, 2008. Also, the decision may sound a death knell for the scrap re-rolling industry," said Pravin Nagarsheth, president, Iron and Steel Scrap Association of India (ISSAI).

Nagarsheth firmly demanded that the Centre change its decision as it would become difficult for the shipbreaking yard to survive. Alang is already facing stiff competition from shipbreaking yards in Bangladesh. Also, the number of ships brought to Alang for breaking and dismantling has gone down over the last five years.

"Though the steel ministry has made BIS mark mandatory, the government cannot overlook the fact that scrap recovered by breaking ships is of second quality and the scrap so recovered cannot meet the BIS standards. Scrap received from ships at Alang fails to meet 17 BIS categories," he said, adding that representations would be made to the ministry. The industry plans to take up the issue with the government.

Sources said that there will be a meeting to discuss the issue and the association will also submit a written appeal to reconsider the Centre's decision. ISSAI and other associations are also gearing up to make their voices heard.

According to Vinodbhai Patel, vice president (India), Ship Recycling and Industries Association, the Alang shipbreaking yard has been reeling under recession for the past five years and there are no signs of Alang coming out of recession in next two years.

On the other hand, Alang is losing out its business, with more and ships sailing to the Bangladesh shores for breaking as there is good demand for steel in the neighbouring country.

He added that the custom import duty in India is higher by 2.5 per cent as compared to Bangladesh. Overall taxes on the industry works out to be around 21 per cent including 5 per cent custom import duty and 14 per cent excise duty.

It may be mentioned here that the number of ships docking Alang shores for breaking dipped to 100 in 2005-06 from 333 ships in 2001-02. Similarly, the amount of scrap recovered from breaking these ships has also gone down from 2.72 million tonne in 2001-02 to 480,000 tonne.