India Eyeing Bangladesh's Top Spot With Perks For Recycling Dying Ships

India is planning 40 billion rupees ($454 million) in incentives to bolster its shipbreaking industry, people familiar with the matter said, as it seeks to claw back market share from sector leader Bangladesh and Pakistan.

The government will spread these monetary benefits over ten years starting 2026 and the cabinet of central ministers is likely to approve the proposal by the end of September, said the people, who did not want to be identified as the information is not public.

Incentives will include a credit note worth about 40% of the ship's scrap value for owners bringing their obsolete vessels to India. The promissory note, valid for three years, can be used to purchase ships built in the country, the people said. India will also allow the ship owners to combine multiple credit notes in a single transaction or sell them, they said.

The financial stimulus is aimed at reinforcing India's standing in the global ship recycling market. India accounted for a third of ships dismantled throughout the world in 2023, next only to the 46% share of Bangladesh, data compiled by the government showed.

India's shipping ministry and the Press Information Bureau did not immediately respond to emails seeking comments on these proposed incentives.

Asia's third largest economy is home to the world's biggest graveyard for ships at Alang on its western coast, which gets 98% of the business coming to India's shores. However, neighbouring Bangladesh and Pakistan have been eating into India's share of the business of dismantling ships that relies on abundant and cheap labor.

Still, business is on an upswing in recent months after years of recession caused by a decline in scrapping of oil tankers following Russia's invasion of Ukraine. Geopolitical upheavals in the recent past forced rerouting of all types of vessels and pushed up the freight rates. That also encouraged shipowners to extend the lifespan of their end-of-life ships for as long as they could.

Additionally, India is considering a shipbreaking facility on its east coast to wean away business from Bangladesh, the people said. 

Prime Minister Narendra Modi's government is also set to approve this month a 250 billion-rupee maritime development fund to encourage shipbuilding in India as it seeks to reduce dependence on foreign-built vessels, the people said. The fund was announced in February as part of the union budget for the year ending March 2026.