Alang units deny tax evasion charge

Middlemen indulging in cash deals, say shipbreakers

Shipbreakers in Alang have denied allegations of any malpractices, claiming their deals are clean.

The intelligence wing of the defence ministry has recently initiated a probe into 'non transparent' deals involving cash purchases of junk ships in the Rs 5000-crore ship demolition market. Such deals help the ship breakers evade taxes. A top level ministry-level meeting was held in New Delhi last week to discuss the issue.

The defence ministry has also asked the steel and finance ministries to probe into the matter. The steel ministry, in turn, has sought details from Gujarat Maritime Board (GMB), under whose jurisdiction Alang operates.

"We do not indulge in cash deals. We pay for the ships bought through the letter of credit of nationalised banks. When funds are easily available through proper banking channels, why should we go for illegal means? These allegations are just to malign the ship breaking industry," Dilip Bobra, director, Aapee Ship Breakers, a leading ship breaker at Alang said.

"It is the international ship buyers who indulge in cash deals. These buy ships in cash from across the world and sell them to us. We don not pay them in cash," he added.

"I have also heard such allegations against the industry. But, not a single ship is brought in Alang for cash. How these ships are sold in international markets, we cannot say, but as far Alang is concerned, these allegations are baseless," said Raj Bansal, president, Ship Recycling Industries Association (India).

According to sources in the ship breaking industry, there are at least a dozen active cash buyers in the international market, and most of these are Indians. Over the past few years, they have emerged as an important link in the sale of old ships, with International Maritime Organisation (IMO) getting stricter with the breakers.

With the recent International Maritime Board's (IMB) decision to scrap 100 ships built before 1977, these cash buyers are doing good business.

"Ship owners are increasingly striking deals with cash buyers, when they want to get rid of the ships. This helps them avoid the responsibility for environmental problems during the demolition process. However, we at Alang buy ships from them through the letter of credit of nationalised banks only," said a shipbreaker at Alang on the condition of anonymity.

C M Parmar, port officer, GMB, Alang Ship Recycling Yard, refused to comment on the issue.