Assocham opposes relaxation in iron ore export duty

The industry body has urged the government to ensure sufficient supply of iron ore to domestic steel industry

Any relaxation in iron ore export duty will further cripple the domestic steel industry, open further floodgates for import of finished products and strain the already worrying current account deficit (CAD), the Assocham said.

In a memorandum submitted to the government, the chamber said, 'To contain the CAD, relaxing the exports restrictions on iron ore is not a step in the right direction and rather if government ensures the availability of the raw-materials for domestic production, which is running at all time low utilisation level, will contain the $6 billion imports of steel by India'.

The production of finished steel had seen a meagre growth of 2.5% in the year 2012-13 while consumption has grown up by 3.25%. The Indian steel demand is met by imports, which have registered a rise of 15% in 2012-13, Assocham said in a statement, here today.

While the steel production has gone up from 61.10 million tonnes in 2009-10 to 78 million tonnes in 2012-13 and projected at 84 million tonnes in 2013-14, the iron ore production has dipped from 218.55 million tonnes in 2009-10 to 140 million tonnes in 2012-13.

The chamber said that there used to be a surplus of almost 100-110 million tonnes in the year 2008-09 and 2009-10. However, this has come down to a level of meagre 15 million tonnes in the year 2012-13. The production of iron ore is expected to remain at the level of 140 million tonnes due to the cap in production in Karnataka, ban in Goa and strict enforcement of environmental regulations in Odisha. However, domestic steel industry requirement is more than 145 million tonnes in the current fiscal.

The government has taken a decision in the budget 2007-08 that iron ore exports will be discouraged through various fiscal measures when there used to be a 100 million tonne surplus availability. If the exports restrictions are relaxed in the present scenario, the iron ore supply situation for the domestic steel industry will further aggravate and impact the production of steel in the country, the chamber said.

In such a scenario, the country will have to increases steel imports, which will further worsen the current account deficit. Even in the current scenario if steel import in the country is approximately $6 billion, which will further increase if iron ore shortage increases due to exports, the Assocham added.