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India to cut import duty on ships to be scrapped
NEW YORK -- India will reduce the import duty on ships to be scrapped to 5 percent from 15 percent to help the country's shipbreaking industry compete with ferrous scrap imports.
The high import duty on ships imported for demolition could no longer be justified, especially as the shipbreaking industry was a significant source of employment, said Ram Vilas Paswan, India's steel minister. |
India is home to the largest shipbreaking industry in the world. But prices for ships for demolition are high because of strong demand and a lack of owners willing to scrap vessels in an environment of high freight rates for dry bulk carriers, tankers and container ships.
Consequently, the amount of scrap steel recovered from shipbreaking operations fell to 2 million tonnes in the 12 months ended April 5 from a peak of 3 million tonnes in 1998-99, and is expected to fall to around 1.2 million tonnes in 2004-05.
The import duty cut could help stimulate the ship scrapping market, although the biggest stimulus would come from a long-lasting decline in freight rates, which is not an immediate prospect, according to analysts. The duty cut restores the rate for ships for demolition to the level it was before 2002.
The government hopes the duty cut will enable shipbreakers to compete more effectively with imported supplies of rerollable scrap steel.
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