NEW DELHI: The finance ministry is considering a proposal from the steel ministry to levy 10% duty on exports of all classes of iron ore, a key input in steel making.
Steel ministry—the nodal agency for policy making in the steel sector—recently wrote to finance minister Pranab Mukherjee suggesting that the proposed export duty has become essential for ensuring availability of iron ore to domestic steel companies, which have been jostling for raw material for some time now.
A final decision (on export duty) will be taken by the finance minister in consultation with the Prime Minister, said a government official in one of the ministries.
The government reduced export duty on iron ore from a level of 15% (imposed in June, 2008) to 8% last year and thereafter to zero after exports plummeted. However, ore exports since then has picked up on the back of a revival in demand from spot markets in China. During the fiscal year 2008-09, India’s iron ore exports even registered a marginal 0.4% growth to 104.7 million over the previous year.
The steel ministry fears that exports will shoot up further once the global economy is back on growth track, said the official. Moreover, domestic consumption of the metal would surge as top steel makers such as SAIL and Tata are setting up huge steel capacities.
The steel ministry’s proposal is for imposing export duty across the board, for all categories of ore. At present only iron lumps attract 5% export duty while there is no duty on iron ore fines. At current price of about $ 70-80 per tonne, the steel ministry’s proposal would mean that mining companies would have to pay Rs 350-400 per tonne as export duty.
“India’s top iron ore producers export iron ore only after meeting the domestic requirement. Imposition of 10% duty on exports of iron ore in addition to levy of ad valorem royalty on the raw material will make exports incompetent in the international market,” said Federation of Indian Mineral Industries secretary general RK Sharma. India produces close to 200 million tonne of iron ore every year, of which 50% is exported. Around 80% of the country’s ore exports go to China, while the rest goes to Japan and Korea.
In the April-June quarter, iron ore exports stood around 26 million tonne, the same as the corresponding quarter of the previous year. But, iron ore exports slipped 45% to 5.6 million tonne in June over the previous month.
Source : ET