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Govt scraps 5% export duty on iron ore pellets |
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KOLKATA: The government has scrapped a 5% export duty imposed on iron ore pellets, as it meets yet another demand of the domestic steel and mining sector reeling under low demand and weak prices.
The announcement of the Central Board for Excise and Customs follows a series of measures — such as a safeguard duty, increase in customs duty and imposition of stringent quality guidelines for imported steel — the government has announced since September 2015 to protect the iron and steel industry from rising imports.
The latest step is expected to benefit pellet makers, which include top miners, as well as leading steel players.
The 5% export duty was imposed in 2014. More than half of India's installed pellet making capacity of 90 million tonnes is unutilised due to poor demand. Reeling under low demand and low capacity utilisation, pellet manufacturers, in particular, had been insisting on removal of the export duty and a revision in distance-based charges to help them ship the product overseas.
The Pellet Manufacturers Association of India has been arguing for the need to distinguish between a mined product like calibrated lump ore or lumps and pellets, which is a manufactured product that attracts excise duty. The association's secretary general, Deepak Bhatnagar, said the levy had "irreparably hurt" the pellet industry, with capacity utilisation dropping to "an abysmal level" of 35%. "Pellet prices have dropped from $130 per tonne when the export duty was levied (January 2014) to $59 per tonne CFR now, making even exports nonviable. While the industry lost a golden opportunity to export, the country lost an opportunity to earn foreign exchange," he said.
PMAI has also urged the government to immediately remove distance-based charges (DBC) for movement of pellets as well as change the classification for movement to Class 140, which is applicable for manufactured and finished products like cement. "Right now, the classification is that of iron ore, which is not correct as pellets are a finished product," it said in a statement. In September 2015, the railways had slashed DBC on movement of iron ore for exports for the first time in three years to a flat Rs 300 per tonne to revive exports. The move was part of the Railways Dynamic Freight Pricing Policy that calibrates market price of commodities to the railway freight rates.
Following this, in October 2015, the government reduced duty on export of iron by MMTC (only NMDC origin) to Japan and South Korea under long-term agreements to 10% from 30% until March 31, 2018.
Source : economictimes.indiatimes.com
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