Industry Overview: Ship Breaking Industry

Ship breaking is a type of disposal of ship involving the breaking up of ships for scrap recycling, with the hulls being discarded in ship graveyards. Ship breaking is a typical activity, which adds value through a 'demolition' process. Most ships have a lifespan of a few decades before there is so much wear that refitting and repair becomes uneconomical.

When a ship goes uneconomic / unsafe as per standards of safety to operate, it is sent for demolition to ship breaking yards. Ship breaking allows materials from the ship, especially steel, to be reused. Equipment on board of the vessel can also be reused. The contribution of the ship breaking yards is to generate value out of unusable ships by segregating it into various components that have their own economic value by subjecting it to a systematic demolishing process.

Until the late 20th century, ship breaking took place in port cities of industrialized countries such as the United Kingdom and the United States. Today, most ship breaking yards are in Pakistan, Bangladesh, and India. Turkey performs just a handful of demolitions each year.

Though western countries have developed superior technologies, which result into high productivity, Asian countries have come up a low cost proposition for two reasons. One, relatively the manpower is very cheap in these countries. So even at a lower productivity rate, operations in these countries prove to be relatively cheaper. Second, western countries have very high standards of safety, which calls for costly measures for ensuring safety.

The reasons behind ship breaking/ recycling being carried out in these countries are as follows:
(1) Cheap and abundant labour;
(2) Vast coastal area with good and favorable tidal impact; and
(3) Management ability.

Primarily India occupied the first position in the world, but with the passage of time the same was replaced by China.

Ship Recycling Process
Ship Recycling is the process of dismantling a vessel's structure for scrapping or disposal and is generally carried out at a beach, pier, dry dock or dismantling slip. It includes a wide range of activities, from removing all gear and equipment to cutting down and recycling the ship's infrastructure.

The ship recycling process is an environment and eco-friendly industrial activity which not only generates re- rollable steel, but also helps society by providing direct and indirect employment.

Old ships are no longer capable of plying and they have such high maintenance costs that it is more economical to scrap them are usually sold to ship-recyclers. These vessels incur expenses such as port charges, crew salaries and oil consumption cost. Thus they become a burden to the shipping companies. And the only safe and economic way of getting rid of such vessels is a systematic recycling. Thus the need of reducing unnecessary ship-traffic in a safe and economic way gave birth to the massive industry called ship-recycling.


After 25-30 years ships are at the end of their sailing life. These 'End of Life Vessels' are sold and dismantled to recover the valuable steel. About 95% of the ship consists of steel. But the ships also contain large amounts of hazardous materials.

Major Consumers
The Industry wise consumption is enumerated hereunder:-
Global Scenario

At present, the global economic integration continues to accelerate and promote international trade. With the shipping industry booming and the continuous growth in global fleets, the number of retired vessels have considerably increased. UNCTAD, "World Ocean Assessment Report", issued in 2008 points out that in 2007 the world's shipping volume reached a record of more than 80 million tons. As of January 2008, the global registration of 100 gross tonnage and above, the total number of merchant shipping 97481, with a total capacity of 11.2 million dwt, 100 every year and have been dismantling decommissioned ships.

China is one of the world's major ship-breaking industry. Since the 20th century, the emergence of organized 60 years of ship-breaking activities began; China's ship-breaking industry has gone through a 40 year course of development. China's ship-breaking enterprises to actively advocated scrapping the green, in the dismantling of production activities, basically the safety, environmental protection, health, some enterprises have passed the international environmental management system and occupational safety and health management system certification; Some enterprises have already or will be included in national and local development of circular economy pilot projects, and has become internationally influential first-class ship-breaking business, and environmental protection in developed countries has been a strong sense of the favour of international ship owners in recent years.

The phase-out means that many tankers will have to be taken out of service Extra in the coming years. Roughly 2,200 single hull oil tankers from the 4,000 crude oil tankers and oil products tankers (over 5,000 dwt). Together these tankers have a dwt of 175 million.
(Source: E.A. Gibson Shipbrokers).

According to newer figures from Clarksons, a total of 590 ships were scrapped from the beginning of the year and until the end of August 2008. These vessels represent a total capacity of 18.1 million tons, while their average age is also quite younger than the relevant ships scrapped last year. In fact, during the whole of 2008 the number of ships demolished had reached just 385 units with a capacity of 13.6 million tonnes.

The average vessel age of each ship scrapped last year was 30.5 years during 2008, while this year this number has dropped at 29 years (for all ship types). For 2009, the average age is at just 25.3 years for tankers and 30.5 years for dry bulk carriers. The increase of scrapping activity comes as no surprise to most industry analysts, as this was expected regardless of the state of the freight market. With the world order book for most ship types near record levels, it was obvious that older ships would have to leave the market eventually. The collapse of the freight market, which commenced about a year ago, simply speeded things up.

Ship Breaking Industry in India
Ship Recycling is not new to India for we know of this activity ever since 1912 in Kolkata and Mumbai. The ship recycling activity in those days was a part of the larger colonial economy like plantations and mining. Steel scrap was worthwhile even then and countries that had yards to recycle ships were often considered to be economically fortunate. Indeed, ship recycling became very important at the end of the two World Wars, especially after the World War II.

Further, after the oil boom in the Middle East, oil became a much transported commodity and large oil tankers added to the fleet. Refrigeration techniques that grew around the early 1950's, too led to the emergence of the large refrigeration vessels. All of these started to age by the middle of 1970's and the ship recycling activity reached new heights in the Western countries.

When the first economic recession came around 1984 and the fleet owners thought that it was better to scrap ships than to maintain them, there was a huge backlog of ships to be demolished. With the recession on, labour appeared to be far too costly and steel scrap yielding far less prices, ships had to look for cheaper labour elsewhere. India, stepped in at this juncture.

One of the reasons why the ship recycling activity became a boon for India was that, the middle of 1980's was a time of the rise of electric arc furnace and a rise in demand for steel melting scrap. The re-rolling mills were already facing an expansion around the middle of 1970's and they now grew up very fast in North and West India. The re- rolling mills were driven mainly by the boom in the construction sector in these parts that emerged as a result of rapid urbanization.

Ship recycling became a source of steel scrap, whether for melting or directly re-rollable material in the re-rolling mills. In terms of price, ship-breaking scrap historically is more expensive than scrap from railways or other melting scrap, but it is cheaper than ingots from the electric arc furnaces and the billets and the semis from the integrated steel plants. Hence, ship-recycling scrap conventionally has proved to be a direct competitor of the integrated steel mills in their market for semis.

In the 1970s ship breaking was concentrated in Europe. Performed at docks, it was a highly mechanised industrial operation. But the costs of upholding environmental, health and safety standards increased. So the shipping industry moved to poorer Asian States.

Ship Recycling At Alang, Bhavnagar (Gujarat)
Alang has a very high inter-tidal gradient. This enables the ship to beach right at the shore during high tide and when the tide recedes the ship stands almost at a dry-dock. This not only makes work easy but also makes easy in terms of collecting the valuables and the waste items from the sand. Usually heavy items are dropped into the sea-water during high tide and this minimizes damage.

Due to high tidal gradient, larger ships can come straight into the shore. This reduces the total working time on each ship.

Since the beach is sandy, the heavy items do not sink in the mud and similarly the hazardous waste matter such as paint and other heavy metal and other deposits do not leach into the soil.

At Alang, due to the fact that ships are beached just on the threshold of the plot, dismantling takes place in controlled conditions.

The rainfall is mild and work can be carried out throughout the year.

Due to the relatively moderate rainfall and shelter from strong tides and winds and also because of the absence of rocks around the area, the Alang yard can recycle smaller ships easily. Therefore, the numbers of ships that can come to this yard are many. In contrast, Gaddani in Pakistan and Chittagong in Bangladesh have strong winds and strong tides respectively and hence they can only demolish very large vessels. Chinese seacoast has typhoons all through the monsoon season and hence ship recycling cannot go throughout the year in an uninterrupted manner.

Alang had received more than 125 ships in the three months of 2009 alone, compared to 136 ships in all of 2007 and 2008.

Currently, there are about 6,000 labour engaged in ship recycling through direct employment, with the indirect beneficiaries amounting to as much as 1 - 1.5 Lac.

Besides, the steel generated from ship recycling contributes nearly 1 - 2 per cent of the country's demand, in the process saving a substantial amount of natural resources and investment (see table)

Comparison of natural resource consumption in production of 2 million tones/year steel in steel plant and that from ship recycling:
Requirement for Requirement for ship Natural Resources steel plant recycling Industry

Iron ore 3508000 t 0
Fuel 3094000 t 0
Process chemicals 80610 t 0
Water 50-120 Mm3 1825 m3
Solid waste aspect 878967 t 12500 t
Cost aspect > Rs.1000 Crore < Rs. 100 Crore

All of these positive aspects of ship recycling are reflected in India at Gujarat Maritime Board's (GMB) Alang Sosia Ship Recycling Yard. Established in 1982 in the Bhavnagar district of the State, it has the distinction of being one of the largest ship recycling yards in the world operated by the beaching method.

Alang has capacity to recycle about 400 ships per year, which generated more than 3.5 million tones of re-rollable steel. It has a total of 173 plots available for ship recycling, spread over a 10 km stretch along the coast aligned from the NE to SW direction.

Facilities Provided at Alang:-
Location: Alang is the largest ship recycling yard in the world. Approximately 10 kms long sea front on the western coast of the Gulf of Cambay adjoining to Alang - Sosiya village is developed as ship recycling yard. By road it is about 50 kms from Bhavnagar. It is also well connected by road.

. Anchorage: Vessels up to 12 meters draught and DWA anchorage. The holding ground, stiff mud and sand is good, while at anchor at DWA due care must be exercised, especially during spring tide.

. Marine Features:
(1) Current: Current is of the order of 3.5 knots.
(2) Waves: No significant wave disturbance has been observed near the shore.
(3) Nature of beaching Ground: Firm and Sandy.

. Road infrastructure:
The ship breaking yard has 171 plots that have been developed along the coast in a stretch of about 10 km. The yard is connected to Highways by two separate approach roads. The main approach road connected to Alang yard is four-lane while the one connecting Sosiya is two-lane.

. Plots:
At present, total 171 plots exists at ship recycling yard and of these 10 plots are of 6000 sqm. area earmarked for breaking VLCCs/ ULCCs

Total ship recycling plot area of Alang and Sosiya is:
 Shipyard No. of Plots Plot Area
 Alang 92 219617 Sqm.
 Sosiya 79 169575 Sqm.
 Water Supply:
GMB has developed water supply scheme on Mahi Pariage pipeline based permanent water supply scheme in the Alang - Sosiya ship recycling yard. Every plot gets about 5000 ltrs. It is available every day. Total 21 stand posts are created throughout the yard, which supplies water to the labours and workers working in the yard.

. Fire Fighting:
Fire fighting arrangement in the yard is being looked after by GMB. They are equipped with following equipments like Multi Purpose fire, Foam Tender, Water Tender, Trailer Fire Pump, Water Tankers, Ambulance van, etc

Scrap Market
The reasons of the growth of the scrap market are twofold. The risk of single-hull vessels increase when it grows 25- 30 years old. In case of collapse, the probability of heavy oil leakage and coast pollution increases.

The work load at Alang is increasing, to such an extent that the yards can hardly meet demands, from January to March 2009 alone 125 ships arrived in port. 136 in all docked in the years 2007 and 2008. A 2010 study by the European Commission into global ship demolition estimated 18 million tons of ships are awaiting disposal. Most of these have set sail for Asia.

Every year around 600-700 larger sea vessels are taken out of service and brought to Asia for scrap. In the 1990s they had an aggregate tonnage of around 15 million dwt a year. However, the scrap market increases and will increase substantially the following years. In 2001 the total number of vessels (608) sold for scrap already totalled a figure of 28 million dwt. This marks a year on year growth of nearly 25%.

The other reason for the growth of the scrap market is the increase of the world fleet (> 100 gt) during the last decades. In 1960 there were around 15,000 ships with an aggregate dwt of 84 million. In 2000 there were around 62,000 ships with an aggregate dwt of 828 million. (Source: Lloyd's Marine Intelligence Unit.) With the growth in the world fleet the need to replace old ships for new ships increases as well. The result: a larger tonnage that has to be scrapped.
(Source: E.A. Gibson Shipbrokers).

With as many as 130 ships being broken simultaneously, the Alang ship-breaking yard has already crossed the milestone of dismantling 5,000 ships before the end of the year 2009. Since its inception in 1982, the yard has recycled 35.61 Lac light displacement tonnage (LDT).

The yard dismantled 4,970 ships up to the end of September 2009.With 20 and 29 ships recycled during October and November respectively, the yard has crossed an important milestone of breaking 5,000 ships since its inception. Till now 5,019 ships have been recycled at the yard.Till November 2009, the yard had dismantled 255 ships in the calendar year. "In fiscal 2008-09, 264 ships were dismantled at the yard.

While 255 ships were recycled by the end of November 2009. The Alang yard recycled 1.94 million light displacement tonnage (LDT) during 2008-09,174 % more than the last fiscal. At present, all the ship- breaking units in the yard have their hands full. There has been a constant increase in the number of ships broken at the Alang yard as a result of the progressive policy of the state government during the last five years.
(Source: Economic Times Ahmedabad Edition, 29-12-2009)

Capacity of Ship Recycling Industry
The industry is mainly concentrated in 30 shipyards comprising of 9 public sector and 21 private sector shipyards. It has approximately 17 docks consisting of 4 Dry-docks & Floating docks with shipyards and 13 Drydocks & Floating Docks with Ports. Among the private sector shipyard Alang is the largest.

Ship recycling in its new avatar in India found a perfect host in Gujarat's Alang. Ship breaking industry in India is mostly concentrated at Alang in Gujarat, which, is the world's largest ship breaking yard catering to nearly 90 per cent of India's ship breaking activity.

However, sporadic activity also takes place in other locations like Sachana, Gujarat, Mumbai and Kolkata. The ship breaking activity at Alang includes a total of 170 yards of which 50-70 is operational and around 50,000 people are involved directly or indirectly in the business of scrapping. Since its inception in 1982, the yard has recycled 3.561 million LDT (Light Displacement Tonnage). Till January 2010, 5,019 ships have been recycled at the yard.

India, China, Pakistan and Bangladesh carry out 80 percent of the world's ship breaking business. Labour activists say this is largely because of cheap labour costs and lax safety standards that fail to protect workers who are exposed to toxic chemicals as they dismantle the scrapped vessels.

About 150-200 workers can break down a 10,000-tonne ship in three months, salvaging nearly every part.

The work load at Alang is increasing, to such an extent that the yards can hardly meet demands. From January to March 2009 alone 125 ships arrived in port, 136 in all docked in the years 2007 and 2008. A study conducted by the European Commission in the current year estimated 18 million tons of ships awaiting disposal. Most of these have set sail for Asia.

But there is a flip side. Activists fret that the booming business will encourage a disregard for safety and environment guidelines, which they say ship breakers are already flouting.

Stretched along the 11-km (7 mile) coastline, beached oil tankers and cargo carriers lie in various stages of disembowelment. Peculiar tide patterns that bring high tide in only twice a month enable the beaching of ships right up to the yards.

About 80 percent of a ship's steel is "reusable steel", cheaper than primary steel and used mostly in construction.

Growth Driver
Ship repair is generally considered as an evergreen industry, due to the requirement of regular inspection and maintenance of machinery, hull and machinery surveys, dry-docking etc. However, shipbuilding is often prone to the pulls and pressures of market forces and cyclic change. During normal times, even profit margins are much better from ship repair business compared to ship building business. Also, in general it is easier for shipbuilding yards to take on ship repairs than vice versa. The demand for ship recycling arises under the following circumstances:

Due to increasing pressure from various international organizations, governments and port authorities to curtail the operation of older, single-hull ships. It is believed that there is a significant latent replacement demand for aging ships, especially tankers.

When freight rates are high and freight demand is strong, ship owners typically delay the scrapping of older vessels in favour of repairing and maintaining such vessels to international standards, in order to maximize revenues.

Measures for making the industry globally recognized
Delivery Time:
The ship repair industry is highly competitive and in the prevailing market scenario, the level at which the time charter and freight earnings are set, the lay-up time for repairs is critical and completion of repairs on time is of paramount importance.

Competitive pricing: the repair cost for ship owner is an important factor; hence a yard giving competitive pricing will be able to attract the ship owners.

Quality: In this regard, the adoption of quality management system for the ship repair yard is a step to demonstrate the serious concern with which the shipyard views the quality of its products and services. Ship owners will prefer to send their ships to a repair yard where quality management systems are in place.

Infrastructure: Ship owners will also like to see the availability of infrastructure i.e. dry-dock, wet berths, carnage, other facilities inside the yard, connectivity by rail, road and air, specialist services, various sub- contractors and various suppliers etc.

The ship recycling activities create economic opportunities for thousands of labourers and contribute to the economic growth of regions. The average life of a ship is about 27 years. Once a ship loses its economic life, it has to be replaced with a new one. Practically 100% of the ship is recycled. Ship breaking can be claimed to be a sound sustainable industrial activity.

Ship demolition remove large volumes of obsolete tonnage from fleets which otherwise require to huge monetary consideration to manage if not dismantled. As per the 2007 report of working group for ship repair industry for 11th Five Year Plan (2007-2012), the industry has the potential of Rs. 2440-2790 crore per year.

Indian ship recycling industry is well poised to grow, given the easy availability of skilled labour the advantage of being situated along the major shipping lanes between the East and West.

Problems faced by the Industry
Deadly poisons: Ships, especially those built before the 1980's, have been constructed with many deadly materials. The Basel convention has laid down regulations that say that ships constructed using toxic substances are considered hazardous waste, and cannot be exported for dismantling without stripping them of the dangerous substances. But in blatant violation of Basel, ship owners transport their toxic vessels to be broken down in Asian yards, releasing terrible poisons into the environment and playing havoc with the health of the people and all living creature in the ecosystem. The pollution caused is both acute and long term.

Hazards to lives and livelihoods: The toxic chemicals released by ship breaking pollute the soil, rivers and seas in the vicinity. The land around the yards becomes unfit for agriculture. With aquatic life fleeing from the deadly poisons, fishing in the nearby waters is no longer possible. This erosion of their traditional livelihoods drives more and more impoverished people to the dangerous shipyards.

No rules and Permanent Danger: Unlike in Western countries where there are stringent regulations on hazardous substances and health and safety measure, in third world nations there is hardly any waste management procedures. Rules and regulations, if they exist are rarely enforced. Hazardous waste is directly dumped into the sea, and left exposed on the land.

For example in India though officially import of toxic ships for scrap is not allowed, sediments in Alang show greater levels of contamination than the most heavily industrialized port areas. Over 100,000 men and women work in ship breaking yards in Asia. They are mostly migrant labourers, living in inadequate makeshift facilities on or near the yard. There is a lack of basic minimum sanitation, medical or recreation facilities. Even access to safe drinking water is absent. All these factors compound worker's health problems further.

Lack of use of ship breaking equipments and training: According to estimates only 10% of the 40,000 man and women in Alang have received any kind of training. Besides from being untrained and poor, their work involves very hard labour. They dismantle ships virtually with their bare hands, torch-cutting ship steel into small pieces using very little machinery. They face permanent and deadly dangers. There is a clear-cut shortage of PPE (personal Protective Equipments). They don't even have gumboot and helmets. There is no equipment for machine safety, fire safety, chemical safety and water safety. Whatever little equipment that exist, is poorly maintained

Health and Environmental Risks: In addition to steel and other useful materials, however, ships (particularly older vessels) can contain many substances that are banned or considered dangerous in developed countries. Asbestos and polychlorinated biphenyls (PCBs) are typical examples. Asbestos was used heavily in ship construction until it was finally banned in most of the developed world in the mid 1980s.

Currently, the costs associated with removing asbestos, along with the potentially expensive insurance and health risks, have meant that ship-breaking in most developed countries is no longer economically viable. Removing the metal for scrap can potentially cost more than the scrap value of the metal itself.

In the developing world, however, shipyards can operate without the risk of personal injury lawsuits or workers' health claims, meaning many of these shipyards may operate with high health risks. Protective equipment is sometimes absent or inadequate. Dangerous vapors and fumes from burning materials can be inhaled, and dusty asbestos-laden areas are commonplace. Other than the health of the yard workers, in recent years, ship breaking has also become an issue of major environmental concern.

Many ship breaking yards in developing nations have lax or no environmental law, enabling large quantities of highly toxic materials to escape into the environment and causing serious health problems among ship breakers, the local population and wildlife.

India is naturally endowed with a long coastline spanning 7,517 km wherein the country's 13 major ports and around 200 non-major ports are located across nine maritime states. Of the non-major ports, around 66 are operational and these are mainly in the States of Gujarat, Andhra Pradesh, Goa and Maharashtra.

Post-liberalization, the participation of private players in the port sector has been encouraging as is evident from their investments in green field commercial and captive ports and in various port related logistics and support activities. (Source: Indian Ports & Infrastructure Review, October 2010, Volume 2: Issue 10).

Indian Scenario
Considering the favourable outlook for growth in cargo traffic and the investments proposed in setting up new capacities and expanding existing ones, the port support services sector appears poised for growth. The activities of this sector include operations and maintenance (O&M) services (like pilotage, harbouring, mooring, ligterage, and dredging) and provision for Marine assets (like tugs, mooring launches, pilot launches, barges and dredgers).

Entry of foreign players in this sector has been relatively limited so far, partly because of the protection available to domestic players under the Cabotage Law, which is akin to a purchase preference for vessel carrying Indian flags. Also, foreign operators have generally preferred to operate in the more lucrative off-shore drilling business as against conventional port services.

At present, the Indian port support services sector has players that are focused mainly on providing marine assets on long-term contractual basis and on offering offshore services to the exploration and production (E & P) sector, only a few players currently provide port O & M services. (Source: Indian Ports & Infrastructure Review, October 2010, Volume 2: Issue 10)

Coastal shipping vessels operating in India have grown from 458 on March 31, 2005 to 658 as on December 1, 2009 with gross registered tonnage (GRT) growing from 8,10,591 to 9,75, 507. During the same period, the number of overseas vessels increased from 228 to 308 with the GRT growing from 72,02,364 to 84,12,226. While the share of the coastal shipping vessels operated in India has hovered between 60 and 68 per cent during the last five years, the GRT has been almost stagnant at around 10 percent. Currently, around 7 percent of domestic cargo is transported through coastal shipping.

The coastal shipping, despite the inherent advantages and the promise of viability, could not take off owing to regulatory, fiscal and infrastructure hurdles coming in the way. (Source: Maritime Gateway Journal, February 2010)

Summary of Coastal Vessels as on 30.06.2010
Sr. No. Type of Vessel No. of Vessel G.T. D.W.T.
1 Dry Cargo Liner 71 121843 177836
2 Tug 228 683621 23140
3 Dry Cargo Bulk Carriers 12 237220 364928
4 Tankers (Product Carriers) 13 40035 43226
5 Tankers (Crude Oil Carriers) 2 50080 82246
6 Passenger-Cum-Cargo 31 86173 27232
7 Passenger Services 52 16473 1930
8 Ethylene Gas Carriers 3 8727 6558
9 Ro-Ro 1 956 1386
10 Dredgers 28 121893 76152
11 Offshore Supply Services 110 117679 133896
12 Specialized Vessels for Offshore Services 38 88201 50480
13 Port Trusts & Maritme Boards 93 45199 15702

Total (Vessels) Coastal Trade 682 1002840 1004712
(Source: Ministry of Shipping)

Demand for Offshore Support Vessels
The demand for offshore support vessels is dependent by a number of factors that are discussed earlier, including;

. Economic activities and global oil and gas demand;
. Levels of drilling activity;
. Levels of offshore activity;
. Oil and gas prices and E&P spending;
. Location of oil fields and water depth;
. Decommissioning or refurbishment of rigs; and
. Availability of offshore support vessels.

Demand for Speed Boat in Security Challenges
The Indian Ocean Region (IOR) is commonly described as stretching from East Africa to Tasmania and From Asia to Antarctica. Nearly 100,000 ships transit the Indian Ocean each year carrying one third of the oil. The geographical position of the Indian Ocean and its strategic waterways provide the shortest and most economical lines of communication linking it to the Atlantic and the Pacific Ocean. The choke points make the India Ocean vulnerable to control of shipping and therefore it is imperative that the choke points are free from trouble at all time.

Some other salient aspects of the IOR are as follows:-
- The IOR holds 65% of the known reserves of strategic raw material, including one third of natural gas and more than half of the world's oils reserves. Australia, which is washed by the Indian Ocean to its west, holds about 40% of the world's known Uranium reserves.
- About 95% of the world's cyber-space traffic is carried in the undersea cables that span the Indian Ocean Seabed.
- The world's fastest growing economies such as India and Vietnam and the richest countries such as Australia co-exist with some of the poorest countries of the world such as Somalia and Afghanistan.
- The IOR is the de facto home of global terrorism with the world's leading terrorist group present and active in the many regional states and states such as Pakistan covertly aiding and abetting subversive elements.
- The IOR is also the centre of gravity of piracy and many trans-national crime, with the majority of the pirate attacks occurring here.
- The IOR is the Locus of 70% of the world's natural disaster. Majority of these having occurred in SE Asia.

As a result of these factors there is increased pressure on the navies to provide security at sea. Further, due to the multinational nature of the shipping industry, there is also a need for navies to evolve cooperative security mechanism. Perhaps, signs of this evolution can be seen in the Gulf of Aden where more than 20 warships from over 14 navies are currently operating on anti- piracy patrols.
(Source: Indian Ports & Infrastructure, October 2010, Volume 2: Issue 10)

Major Users
The offshore supporting vessels are mainly used at ports and few of the major ports operating in the country are as under:

1. Kolkata Port
2. Paradip Port
3. New Mangalore Port
4. Cochin Port
5. Jawaharlal Nehru Port
6. Mumbai Port
7. Ennore Port
8. Chennai Port
9. Tuticorin Port
10. Mormugao Port
11. Kandla Port
12. Visakhapatnam Port

Growth Driver
The major growth of offshore supporting vessels depends on growth of ports. The present policy of the Central Government and State Government envisage high growth in port sector as detailed below and this will result in higher growth of offshore supporting vessels.

To facilitate private sector participation, Government of India has also put in place a favorable and investor friendly policy framework. Some of the policy initiatives taken by the Ministry include:-

100 % foreign direct investment allowed in Shipping and Port sectors.
The Model Concession Agreement for port projects has been simplified and this has expedited the decision making process.
Bidding documents have also been standardized to ensure uniformity and transparency in the award of projects.
Tariffs are being fixed upfront by the Tariff Authority of Major Ports.
Acquisition of all types of ships has been brought under the Open General License.
As a result of these initiatives, private investment in the port sector has increased significantly over the years. About 24 PPP projects involving an investment of almost 65 billion Indian Rupees have been completed and another 19 PPP projects in major ports are under implementation, involving an investment of almost Rs. 125 billion. Currently 22 PPP projects are under bidding and scheduled to ward in current financial year involving an investment of almost Rs. 160 billion. (Source: Indian Ports & Infrastructure, October 2010, Volume 2: Issue 10)
Source:VMS Industries Ltd. - 30/05/2011

Unless otherwise indicated, the information in this section is derived from a combination of various official and unofficial publicly available materials and sources of information. It has not been independently verified by the Company, the Book Running Lead Manager and their respective legal or financial advisors, and no representations is made as to the accuracy of this information, which may be inconsistent with information available or compiled from other sources. Industry sources and publications generally state that the information contained therein has been obtained from sources generally believed to be reliable, but their accuracy, completeness, underlying assumptions and reliability cannot be assured. Accordingly, investment decisions should not be based on such information.

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