The Steel Ministry has quashed manganese alloy industry's plea for abolishing the import duty of 2.5% on manganese ore, according to sources.
At a recent meeting with both state-run MOIL and Indian Ferro Alloy Producers' Associations (IFAPA), Secretary D R S Choudhary favoured maintaining the status quo, sources said.
"The matter was examined in a meeting with both IFAPA and MOIL in the ministry by the Secretary. It was decided that we may not recommend any change in the import duty of manganese ore at this stage," a source in the ministry said.
MOIL is the country's largest producer of manganese ore, producing on an average of 10 lakh tonnes per annum (mtpa). Of the total production, 7.5-8 lakh tonnes go to meet the need of steel PSUs and the rest is used by manganese alloy industry, represented by IFAPA.
Manganese ore attracts 2.5% import duty. India had produced 28 lakh tonnes ore and imported 13 lakh tonnes manganese ore in 2010-11. Exports were at a little over eight lakh tonnes.
During the meeting, IFAPA said manganese ore produced by other domestic mines is of low grade and high iron ore content and hence, these are not suitable to produce the best quality of manganese alloys.
These inferior quality of manganese ores are required to be blended with better variety supplied by MOIL to prepare a suitable composition and for use in the production of alloys.
"In view of the shortfall of availability of manganese ore in the country, we, therefore, request the basic customs duty on import of manganese ore needs to be reduced to nil from the existing 2.5%," IFAPA pleaded.
MOIL, on the other hand, stated that in the absence of demand from major steel producing countries, foreign manganese ore producers are diverting their production to Indian market and demanded a revision of the existing rates.
"Therefore, we are finding it difficult to sell ore in the domestic market. We request that maintaining import duty of 2.5% will adversely affect the competitiveness of the domestic ore producers," MOIL said.
"It is desirable to revise the import duty on manganese ore suitably to enable the industry to have a level-playing field," it added.