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Monday, 15 June 2026

FROM MILK TO METAL

FROM MILK TO METAL :

KURIAN'S GHOST WALKS THE ALANG SHORE

hemenparekh.in | June 2026

[ What Just Happened ]

India's Ministry of Ports, Shipping and Waterways, at the 37th Foundation Day celebrations of JNPA on May 29, 2026, unveiled a Unified Ship Recycling Portal as part of the government's ₹70,000-crore maritime development package. Press Information Bureau

Under the scheme, ship owners recycling vessels at Hong Kong Convention-compliant Indian yards can receive a credit note equivalent to 40 per cent of the vessel's scrap value, redeemable against new shipbuilding projects in India. Press Information Bureau

India has since issued its first Ship Recycling Credit Note to Bella Shipping India Pvt Ltd, following the environmentally compliant recycling of a Capesize bulk carrier — marking the operational launch of a scheme designed to link ship recycling with domestic shipbuilding. Shippinginbox

The credit note system forms an integral part of the ₹69,725 crore maritime development package approved by the Union Cabinet on September 24, 2025, aimed at revitalising India's shipbuilding and recycling industries. Under the policy, when a ship is dismantled in India, the ship owner receives a credit note worth up to 40% of the ship's scrap value — redeemable when building a new ship in an Indian yard, or, with a recent amendment, sold to another party, with a three-year validity period. Shippinginbox

[ What I Had Suggested — Earlier ]

My blog post on Verghese Kurian ( myblogepage.blogspot.com/search?q=Verghese+kurian ) drew a pointed analogy:

What Kurian did for milk — he did for the primary producer.

Before Amul, the milk farmer produced the raw material, sold it cheap to middlemen (Polson Dairy), and saw none of the value that was created downstream — in processing, branding, distribution, and profit.

Kurian flipped that equation. He made the farmer the owner of the cooperative — the very entity that processed, branded and sold the milk. Value that had leaked downstream was now retained within the producing community.

I asked: why can't we do this at Alang?

Alang's ship recyclers — the yard workers, the small operators — are today's version of Kurian's milk farmers. They provide the raw material (dismantled steel, salvaged equipment), but the bulk of the value — as re-rolled steel, as commodity inputs to construction and manufacturing — gets captured by downstream steel mills and traders. The Alang worker sees daily wages. The steel mill sees margin.

My suggestion: an Alang Cooperative on the Amul model — where recycling yards collectively own downstream processing, or receive a structured value-share in the steel they produce, rather than merely a scrap-price.

[ The Commonality — Striking and Undeniable ]

The government's Credit Note scheme and my Kurian-inspired cooperative suggestion share one foundational idea:

Value created at the point of dismantling must not all leak downstream. Some of it must flow back — to incentivise, to retain, to reinvest.

Kurian achieved this through ownership — the farmer owned the co-op that sold the milk.

The Credit Note achieves this through financial instrument — the ship owner who demolishes retains a claim (40% of scrap value) on the next cycle of creation (new ship construction).

Both are, at their core, circular value architectures — ensuring that the act of ending (a cow's milk, a ship's life) seeds the act of beginning (the next product, the next vessel).

[ Where the Government Has Gone Further ]

The Credit Note system adds a dimension I had not fully articulated: it links demolition to construction — not just redistributes value horizontally within recycling, but creates a forward chain:

Recycle here → get credit → build here → recycle here again.

Industry experts believe the scheme could play an important role in supporting India's ambitions to develop a stronger domestic shipbuilding industry. By linking recycling incentives to new vessel construction, the government aims to retain more value within the maritime sector and stimulate investment in local shipyards. The measure also supports the country's "Make in India" initiative and broader goals of enhancing maritime self-reliance. Shippinginbox

Kurian would have recognised this instantly. Operation Flood was not just about cooperatives — it was about building the full chain: procurement → processing → branding → marketing → reinvestment. He never allowed value to leak at any node.

The Credit Note does the same for maritime India.

[ Where My Suggestion Goes Further Still ]

The Credit Note currently flows to the ship owner — the large corporate entity that decides where to scrap its vessel.

My Kurian-inspired suggestion was aimed one level lower: the yard operators and workers at Alang, who account for nearly 98 per cent of India's ship recycling volume and a third of global volume, but who remain piece-rate wage earners — not beneficiaries of any value-share instrument. Al Jazeera

I would urge the Ministry to consider:

Amendment to the Credit Note Scheme: A portion of the 40% credit note — say, 5–10% — to be mandatorily deposited into an Alang Workers' Cooperative Fund, managed on the Amul model, invested in worker housing, health, skills upgrading, and ultimately, in cooperative ownership of secondary processing facilities at Alang itself.

Call it the Kurian Clause.

[ The Bigger Picture ]

India has always been good at producing raw materials and exporting value to others.

Kurian broke that pattern for milk. Now — partially — the Credit Note breaks it for ships.

The next step is to break it for people — the 25,000+ workers of Alang — who are still, half a century after Kurian showed us the way, selling their labour cheap while others capture the margin.

When that happens, we will have truly honoured Verghese Kurian's legacy — not with a statue, but with a structure.

Prior Blog Reference:
http://myblogepage.blogspot.com/search?q=Verghese+kurian

News Trigger:
Hindu BusinessLine — Credit Note Buoys Up Ship Recyclers (June 2026)

With regards,
Hemen Parekh | hemenparekh.in | Mumbai | June 2026

Monday, 30 June 2025

Piyushbhai : How About Making This Deal ?

Dear Shri Piyush Goyal Ji,

Building upon my email to you yesterday regarding the Dual Scrapping Strategy for end-of-life (EoL) vehicles and ships, I am pleased to present a concrete, quantified proposal for a barter deal between India, the United States, and the European Union. This proposal leverages the scrapping of EoL vehicles and ships to create mutual economic benefits, reduce costs, and enhance sustainability. Inspired by Verghese Kurian’s innovative approach to securing free milk powder from Denmark, we propose a similar “win-win” strategy where both sides save and earn significantly.

The Proposal: A Barter Deal for Steel Scrap

We propose that the US and EU deliver a portion of their EoL vehicles and ships to Alang, Gujarat, free of cost, where India’s world-class shipbreaking and emerging vehicle scrapping infrastructure can process them. In return, India will supply a fraction of the resulting steel scrap back to the US and EU, delivered free to their designated ports. This barter deal eliminates tariffs (as 100% tariff on a zero selling price is zero) and ensures both sides gain economically and environmentally.

Below, we outline the quantified benefits, supported by the latest available data, to demonstrate the savings and earnings for all parties.

Key Data and Quantified Benefits

1. US and EU: EoL Vehicles, Scrap Generation, and Trade

Annual EoL Vehicles Scrapped:
- US: Approximately 12 million vehicles are scrapped annually. Assuming an average vehicle weight of 1.5 tons, with 70% being steel, this generates ~8.4 million tons of steel scrap per year (12 million × 1.5 × 0.7).
- EU: Around 6 million vehicles are scrapped annually, yielding ~4.2 million tons of steel scrap (6 million × 1.5 × 0.7).
Local Steel Industry Usage:
- US: The US steel industry consumes ~30 million tons of scrap annually, with ~25–30% of scrap supply managed by mill-owned scrap yards. The US exports ~15 million tons of steel scrap annually at an average price of $400 per ton, earning ~$6 billion in foreign exchange.
- EU: The EU consumes ~50 million tons of scrap annually but faces a projected shortage of 10–15 million tons by 2030. It exports ~20 million tons at ~$400 per ton, earning ~$8 billion annually.
Scrap Imports:
- US: Imports ~5 million tons of steel scrap annually at ~$450 per ton, costing ~$2.25 billion.
- EU: Imports ~10 million tons at ~$450 per ton, costing ~$4.5 billion.
Cost of Disposal:
- Disposing of EoL vehicles domestically costs ~$100 per ton in the US and EU due to transportation, labor, and environmental compliance. For 12 million tons (US) and 6 million tons (EU), disposal costs are ~$1.2 billion and ~$600 million, respectively.

2. India: Vehicle Scrappage Policy and Steel Scrap

Annual EoL Vehicles: By 2025, India expects ~2.25 million vehicles (including two-wheelers and commercial vehicles) to reach EoL, generating ~9 million tons of steel scrap (approximating 2022 import levels). By 2030, this is projected to grow significantly.
Scrap Usage and Imports:
- India’s steel industry consumes ~20 million tons of scrap annually but faces a shortage, importing ~10 million tons in FY2023 at ~$450 per ton, costing ~$4.5 billion.
- India exports negligible amounts of steel scrap due to domestic demand.
Scrapping Infrastructure:
- India has limited automated fitness test centers (7) and scrappage centers (2), but Alang’s shipbreaking capacity is world-leading, processing ~700,000 tons of ship steel annually. Expanding vehicle scrapping could leverage this expertise.
National Steel Policy (2017): Targets 230 million tons of steel production by 2030, with scrap playing a critical role in reducing CO2 emissions (currently 2.5–2.85 tons per ton of steel vs. global average of 1.4 tons).

3. Proposed Barter Deal Mechanics

US-EU Contribution:
- The US and EU send 2 million EoL vehicles annually to Alang (1.5 million from the US, 0.5 million from the EU), yielding ~3 million tons of steel scrap (2 million × 1.5 × 0.7).
- Additionally, 50 EoL ships (average 20,000 tons each, 80% steel) yield ~800,000 tons of steel scrap (50 × 20,000 × 0.8).
- Total Scrap Generated: ~3.8 million tons annually.
- Cost Savings for US-EU:
  - Domestic disposal cost avoided: 3 million tons × $100/ton = $300 million annually.
  - Shipping cost to Alang: ~$50 per ton (cheaper than sea dumping, as per Kurian’s logic). For 3.8 million tons, total shipping cost = $190 million.
  - Net Savings: $300 million - $190 million = $110 million annually.
India’s Contribution:
- India returns 10% of the scrap (380,000 tons) to US-EU ports, free of cost.
- India retains 90% (3.42 million tons) for domestic use, reducing import needs.
- Cost Savings for India:
  - Import cost avoided: 3.42 million tons × $450/ton = ~$1.54 billion annually.
  - Shipping cost for 380,000 tons to US-EU: ~$19 million ($50/ton).
  - Net Savings: $1.54 billion - $19 million = ~$1.52 billion annually.
Additional Benefits:
- US-EU: Reduced import bills, access to high-quality scrap, and compliance with carbon border adjustment mechanisms (e.g., EU’s CBAM).
- India: Boosts domestic scrap supply, supports National Steel Policy, reduces CO2 emissions, and creates jobs (e.g., Tata Motors’ Bhubaneswar facility employs hundreds).

Why This is a Win-Win Deal

For US-EU:
- Saves $110 million annually in disposal costs.
- Secures 380,000 tons of free scrap, reducing import costs by ~$171 million ($450/ton × 380,000).
- Avoids export restrictions and tariffs, enhancing trade flexibility.
For India:
- Saves ~$1.52 billion annually in scrap import costs.
- Enhances steel industry competitiveness and supports decarbonization goals.
- Leverages Alang’s infrastructure, creating jobs and reducing reliance on imported scrap.
Global Impact: Promotes circular economy principles, reduces pollution, and aligns with global net-zero targets.

Implementation Steps

Negotiate with US-EU Trade Bodies: Engage with the US Department of Commerce and EU’s DG Trade to formalize the barter agreement, highlighting mutual savings.
Expand Alang’s Capacity: Invest in automated scrapping facilities to handle 2 million vehicles and 50 ships annually, leveraging Tata Steel’s auto shredding model.
Streamline Logistics: Partner with shipping companies to optimize transport costs, ensuring savings exceed disposal costs (as in Kurian’s model).
Policy Support: Amend India’s Vehicle Scrappage Policy (2022) to incentivize foreign EoL vehicle imports with tax rebates, mirroring US and EU incentives.
Public-Private Collaboration: Involve Tata Steel, ArcelorMittal, and global players like Schnitzer Steel to ensure efficient scrap processing and distribution.

Conclusion

This barter deal offers a compelling economic case: the US and EU save $281 million annually ($110 million disposal + $171 million import costs), while India saves $1.52 billion in import costs. By replicating Verghese Kurian’s logic, we turn a costly disposal problem into a profitable opportunity, fostering sustainability and strengthening India’s steel industry. I urge you to pitch this proposal to US and EU trade negotiators, emphasizing the quantified benefits and India’s readiness to lead in global scrap recycling.

Yours sincerely,
Hemen Bhai

Sources:

India’s Vehicle Scrappage Policy and Steel Scrap Data:
US-EU Scrap Statistics and Trade:

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