The largest ship-breaking yard on the planet!

By B V Kumar, Former CBEC Member

THE other day I was watching the National Geographic Channel and suddenly I felt that there was something familiar in what I was watching. The programme was covering, the Alang Ship-Breaking Yard. The commentator concluded by saying that this was the largest Ship-Breaking Yard on the Planet. He further stated that atleast one worker dies everyday in Alang due to accidents, infection or pollution. He further stated that probably Alang is one place where the maximum amount of pollution is caused on our planet. While I felt proud that the Alang Ship-Breaking Yard is providing direct employment to thousands of people in the primary and secondary sectors, it is also providing secondary sources of steel scrap for our Steel Industry, I felt sad that I was responsible in a way for the massive pollution, Alang Ship-Breaking Yard is causing and the misery of the workers who are dying uncared and unsung.

One may be wondering as to how Alang Ship-Breaking Yard was started. There hangs a tale. It was some time in 1982, when I was functioning as Commissioner of Customs, Gujarat. As usual I was in the Custom House by 9.00 A.M, unlike today, where even the senior most Officers do not reach the Custom House before 11.00 A.M (See 'Raisina Hill Se' for North Block latest fiat for late-comers). I suddenly received a call from the most unexpected quarter, viz., Mr. Sanat Bhai Mehta, the then Finance Minister of Gujarat. [Later he was appointed as the Chairman of The Narmada Valley Development Project and was responsible for its take off]. He was not only pragmatic but also efficient, progressive and responsible for the industrialization of Gujarat. He asked me as to how much time I would take to declare Alang as a Customs Port under Section 8 of the Customs Act, 1962, as a landing place and for the loading and unloading of goods. I asked him as to what was the object of declaring Alang as a Customs Port. He stated that about 8 Re-rolling mills in Bhavanagar have closed down for want of raw materials. He therefore, wanted a Ship-Breaking Yard to be started at Alang. I informed him that it is necessary for the Government of Gujarat to first notify Alang as a 'Port' under the Gujarat State Ports Act, and then in no time I would notify Alang as a Customs Port.

Efficient and prompt he was, but I never dreamt that by 10.00 A.M. he would send a messenger with a Notification Published in the Gazette of the Government of Gujarat, notifying Alang as a 'Port'. I promptly issued a Notification under Section 8 of the Customs Act, 1962 and forwarded a copy to him.

At that point of time, the nearest Customs Port to Alang was Talaja. The next day I proceeded to Alang and requested the Customs Officers posted at Talaja to come and meet me at Alang. When I reached there at about 11.00 A.M. the Customs Officers, consisting of one Superintendent and four Inspectors were already present. It was a small village with about 50 or 60 houses and there was only one well with potable water. The house owner generously agreed to provide drinking water if the Customs Officers are posted at Alang. It was blazing sun and the place was like a sandy desert, the only relief was the blue sea. There was not a single house, which was fit to be taken on rent for setting up a Custom House. I asked the Officers whether they had any experience in supervising and assessing ships, which are brought for breaking. They had no such experience nor they ever saw a ship, which was brought for breaking.

I sent all the Customs Officers posted at Talaja for a week's training to Darukhana, which is a part of the New Custom House Bombay, where Ships are brought for breaking. After they came back from training they undertook the assessments of ships brought for breaking. Since, there was no infrastructure at Alang they would daily come from Talaja complete their work and go back in the evening. One should imagine the difficult working conditions of the staff in those days, compared to the comfort in which the present day Officers function.

With the help of Metal Scrap Trading Corporation (MSTC) - a Government of India undertaking, which was declared as a Canalizing Agency, dozens of Ships were being purchased for being scrapped at Alang. Since the local labour was not familiar with the cutting operations, labour was being brought from Orissa and Bihar.

In the Budget Speech for the year 1994 - 1995, the Finance Minister Dr. Manmohan Singh, as he then was, inter alia stated as follows:

It may be recalled that in the last budget, in order to give encouragement to the ship breaking industry, basic Customs duty on ships for breaking was reduced to 5%. Countervailing duty was payable in addition. Ferrous metals obtained from breaking up of ships were consequently exempted from Excise duty. There have been some disputes regarding liability to countervailing duty on ships for breaking up. In order to obviate the disputes, I propose to exempt ships for breaking up from countervailing duty and correspondingly adjust the basic customs duty to 15%. For the ship breaking industry, all goods obtained from such breaking up are also proposed to be exempted from Excise duty so that ship breaking activity is completely outside the excise control.

This gave a further fillip to the Ship Breaking Industry and in turn to the Units having Induction Furnaces and Re-rolling Mills boosting steel production and generating employment.

It is for posterity to judge whether the decision taken by Mr. Sanat Mehta and myself in abetting to set-up a Ship Breaking Yard at Alang was wise or otherwise.