Special Offer!

Fear of Global Sanctions Stalls Ship-Breaking Industry in Gujarat.

Alang Ship Recycling Suffers as Banks Refuse Letters of Credit for Sanctioned Vessels.

Ship recycling at Alang, Gujarat—the world’s largest ship-breaking hub—has come to a halt as Indian banks decline to issue letters of credit (LCs) for sanctioned vessels associated with Russia and Iran. Banks are concerned about exposure to global sanctions that could limit their access to U.S. dollars and destabilise their foreign exchange activities. Without LCs, recyclers are unable to pay ship owners, halting transactions valued at ₹75–200 crore per vessel. Approximately five sanctioned ships have already arrived at Alang but remain unsold. The industry, already affected by a decade-long recession, now faces additional pressure with only 113 ships recycled in FY25—the lowest number seen in ten years, compared to nearly 400 at its height. This crisis persists despite substantial investments by Alang’s 131 recyclers to adhere to the Hong Kong Convention on green ship recycling. Industry experts warn that the current deadlock threatens jobs, revenue, and India’s reputation as a global leader in ship recycling.