FINANCE MINISTER (SHRI P.CHIDAMBARAM)
(a), (b), (c), (d) and (e): A statement is placed on the Table of
the House.
STATEMENT REFERRED TO IN REPLY TO THE LOK SABHA
STARRED QUESTION NO. 433 RAISED BY SHRI MADHUSUDAN
MISTRY AND SHRIMATI JAYABEN B.THAKKAR FOR 25TH AUGUST,2006
REGARDING IMPORT DUTY ON SHIP BREAKING INDUSTRY
[POSITION NO.8]
Part (a): The ship breaking industry provides employment to manual
workers mainly in the state of Gujarat.
Part (b) & (c): Basic customs duty on ships for breaking-up in India
is 5%. As per Integrated Database of World Trade Organization (WTO),
rate of customs duty on ships for breaking-up in Bangladesh is 1000
Bangladesh Taka per light displacement tonnage or LDT (about 3.7%
on ad valorem terms based on current prices). In Pakistan, the
customs duty rate is 5%, while for China, the rate is 3%.
Part (d): Due to gradual decline in ship breaking activity, the number
of workers engaged in this industry has come down in recent years.
This, however, cannot be attributed to the duty structure as the
customs duty rates on ships for breaking-up in India and the
neighbouring countries like Bangladesh and Pakistan are not
significantly different. Employment in ship breaking industry is
coming down on account of a number of factors, some of which are
listed below:
i) Prices of old ships for demolition in the world market have gone up
substantially during the last five years.
ii) There is shortage of ships for breaking.
iii)Less stringent implementation of international environmental and
labour safety regulations relating to ship recycling in Bangladesh
has resulted in shifting of tanker breakage business to Bangladesh.
Part (e): Following remedial measures have been taken/proposed to be
taken for revival of ship breaking industry:
i) ships imported for breaking have been exempted from additional duty
of customs of 4%, which is applicable to almost all items of imports.
ii) 5% customs duty (earlier it was 0%) has been imposed on melting
scrap bringing it at par with the duty on import of ships for
breaking-up.
In addition to the above, following steps are being taken by the
Government of Gujarat:
i) in Alang / Sosiya ship recycling yards, the Gujarat Maritime Board
(GMB) has developed adequate physical, social, health and
environmental infrastructure and it has plans to develop more
facilities like reception jetty and general berth which will help
in safer and quick cutting of ships.
ii) GMB has also framed a new comprehensive policy giving certain
concessions to ship breaking industry, which is under consideration
of Government of Gujarat.
