Dear Shri Piyush Goyalji,
[ piyush.goyal@gov.in
]
These days, you are fighting on two fronts, busy negotiating a BTA with the USA
and a FTA with the EU.
You have that 90 days window provided by USA before their enhanced tariff
become effective
In this context , I am urge
you to revisit my following 2018 email :
In that mail, I had
suggested to position India as a global scrap hub through a
dual scrapping
strategy at Alang – simultaneous scrapping of “ End of life ( EoL )
“ ships and vehicles
Subsequent ( favourable )
developments, made me re-iterate my suggestion
through following emails :
Fast forward to To-Day :
With Alang Ship-Scrapping
Yard operating at a mere 25%
capacity due to a shortage of old ships, and your recent emphasis on
safeguarding national interests in trade negotiations, this approach — using old ships to
transport end-of-life (EoL) vehicles for scrapping in India — aligns perfectly with your vision.
This "killing two birds with one stone" strategy
can make scrap imports a pivotal negotiating point in BTAs with the USA
and FTAs with the EU, especially amid global tariff dynamics.
Dual
Scrapping Proposal
In 2018, I proposed making India the " Car Graveyard of the World " by importing 50 million EoL vehicles annually to meet domestic scrap needs.
My 2020 and 2023 Emails
supported government plans to repurpose Alang for vehicle scrapping, as reported by
Business Line ( December
12, 2020 / 03
Mar 2023 )
I urge once more that old
ships—currently scarce—carry EoL vehicles to Alang, where both can be scrapped.
This would:
- Utilize
Alang’s idle 75% capacity (3.375 million LDT out of 4.5 million annually),
doubling scrap output to 5 million LDT, as
endorsed by the Ship Recycling Industries Association (SRIA).
- Reduce
India’s 8 million ton steel scrap import dependency, saving $ 3-4 billion annually.
- Offer
USA and EU ship-owners and automakers a cost-effective
disposal route, aligning with your " India First "
approach.
Current
Context
:
On April 11, 2025, you emphasized that India will not negotiate trade deals
"at gunpoint" and will protect national interests during the 90-day
tariff pause with the USA, aiming for a win-win interim deal by fall 2025 to
double trade to $ 500 billion by 2030.
Similarly, you highlighted concerns over EU non-tariff
barriers and climate regulations, urging a rethink to enable FTAs, as
noted on April 11, 2025.
This dual scrapping strategy leverages these dynamics,
offering a solution to USA/EU disposal challenges while boosting India’s scrap
self-sufficiency.
Cost
Per Ton of Scrap : India vs. USA/EU
India's cost advantage supports your trade strategy:
- USA/EU
Scrapping Industry :
USA scrap costs reach $ 200-300/ton
for EoL vehicles, with EU-certified ship scrapping at $100-200/ton, escalating
to $ 400+ / ton with compliance.
- Indian
Scrapping Industry :
At Alang, ship scrap hit $ 400/ton in
2020, with vehicle scrapping at $ 150-200/ton. Dual
scrapping could lower this to $120-150/ton, offering a 50-70% cost edge.
This aligns with your focus on reducing import dependency, as India’s exports (a
small GDP percentage) and import reliance were evident during COVID, yet a
trade surplus emerged.
Scrap
Imports as a BTA/FTA Negotiating Point
This strategy resonates with your trade philosophy:
1. USA BTA Leverage :
The 90-day tariff pause (April 11,
2025) offers a window to negotiate duty-free EoL
imports, using Alang’s 2-3 million LDT capacity to
attract USA assets. This supports your interim deal goal, countering
Trump’s tariffs while protecting Indian interests.
2. EU FTA Leverage :
Your concern over EU non-tariff
barriers (April 11, 2025) suggests a need for mutual benefits. Offering to absorb EU EoL ships and vehicles could ease their
regulatory burdens, facilitating an FTA while
India gains scrap, aligning with your call for balanced agreements.
3. Trade War
Resilience :
As you noted, India’s growth story
remains intact despite global tariffs. This strategy could secure BTAs / FTAs,
offsetting EU / China retaliation risks.
4. Policy Alignment :
My "Break in India" vision (100 Alang-type yards scrapping
50 million vehicles) supports Shri Gadkariji’s 30 % raw material cost reduction and your Viksit Bharat 2047 pathway.
Critical Examination
While your trade stance prioritizes national interest, challenges remain. Logistical
hurdles (e.g., loading vehicles onto ships) and environmental risks (e.g.,
toxic waste) require CPCB upgrades. Subsidized competitors and EU resistance to
rethinking non-tariff barriers could complicate negotiations—issues you’ve
flagged as hurdles. Yet, India’s scale and cost advantage, as you’ve
championed, could prevail with strategic BTAs/FTAs.
Recommendation
I urge the Ministry to:
- Pilot dual scrapping at Alang, targeting 1 million LDT of combined scrap in 2025, using
SRIA’s backyard plot model.
- Negotiate
USA BTA terms during the 90-day pause, offering
duty-free EoL imports for trade concessions, aligning with your
interim deal timeline.
- Address
EU non-tariff barriers by proposing EoL absorption
as a mutual benefit, facilitating an FTA per your balanced
approach.
- Upgrade Alang’s infrastructure and align with BIS standards,
supporting your export-led growth vision.
Shri Goyalji,
This dual scrapping strategy, reinforced by your trade principles,
could turn Alang’s crisis into a global trade triumph.
With regards,
Hemen Parekh
Related Readings :
An
International Comparative Study of End of Life ( ELV ) Vehicle Recycling System
ELV
Recycling : Status of Circular Economy in India
Extract
:
"There'll be two areas on which the European Union will
have to rethink. One is these non-trade issues with the seek to superimpose into trade agenda.
Unless they get that out of their system and the European
Commission will need to reflect on it, they'll find it very difficult to get a trade agreement with anybody
whatsoever.
Any self-respecting decent country cannot sign up on commitments
which are irrational beyond
the realm of trade and
where.
The rest of the world has been responsible for the problem in
the first place and has sought to be put on our head as if it's our
responsibility to resolve," he said, stressing upon Europe's climate regulations
