Ship breaking or ship demolition involves breaking up of aged ships for scrap. Ships purchased on the basis of their light displacement tonnage (ldt) are demolished in ship breaking yards and sent to steel re-rolling mills for reuse as raw material for production of steel. Currently, the international ship demolition market is centered around the Indian subcontinent. While a large number of tankers find their way to scrap yards in Pakistan and Bangladesh, Indian ship breaking yards attract mostly dry and general cargo vessels.

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 Calcutta. The ship breaking activity at Alang includes a total of 170 yards of which 50-70 are operational and around 50,000 people are involved directly or indirectly in the business of scrapping. The total tonnage of ships broken in India has varied from a low of 0.65 million ldt in 1991-92 to a high of 2.79 million ldt in 1997-98. Financing is an important aspect of the industry as scrapping normally involves an intermediary 'cash buyer'. Earlier State Bank of Saurashtra and Dena Bank took active role in the ship breaking industry, however, of late, most banks have become reluctant to finance ship scrapping projects.

Ship scrapping industry in India suffers from government apathy. In spite of the fact that re-rolling accounts for about 60 per cent of the national production of bars, rods and structural and ship scrapping supplies nearly 200,000 tonnes of scrap every year to the re-rolling mills, the sector remains largely disorganized as well as unrecognized.

In the recent past, the ship scrapping industry attracted considerable attention on the issues relating to environmental pollution, health problems of labour and violence of human rights. Environmentalists across the world particularly Greenpeace and Basel Action Network have drawn international attention to the poor working environment prevailing at the Indian ship scrapping yards particularly at Alang and opened up fronts everywhere by calling for legal action against scrappers, building up public opinion against scrapping and physically blocking the ships meant for scrapping. The environmental issue could become the single largest factor that could determine the structure of the ship breaking industry in future.

Looking at the prospects of the ship breaking industry in India it has been observed that competition from neighboring countries is expected to become tough in the near future. China has also come back to the scrapping industry in recent years with a bang by capturing a significant volume of tonnage sent for scrapping. Pakistan and Bangladesh are likely to pose serious threat to Indian ship scrapping yards. Considering all the hurdles faced by the Indian ship scrapping industry, ample scope for improvement has remained and Indian ship scrapping industry is expected to take all possible actions to keep the industry vibrant.