Retain 30% duty on iron ore exports: Karnataka steelmakers

Seek urgent intervention of commerce and steel ministries

Steelmakers in Karnataka have sought the intervention of the commerce and steel ministries in retaining 30 per cent duty on export of iron ore. “Any move to withdraw export duty on iron ore would further result in shortage of iron ore for the domestic steel industry, which is already reeling under acute shortage of the key raw material,” the steel makers said in a memorandum.

Iron ore production in FY13 was at 140 million tonnes, down from a high of 218 million tonnes in 2009-10, said the representatives of the steel industry under the banner of Karnataka Iron and Steel Manufacturers’ Association (Kisma). This is because of the recently-introduced cap on the production of iron ore at 30 million tonnes in Karnataka, the ban on mining in Goa by the Supreme Court and strict environment regulatory regime in Odisha curtailed, they added.

“These actions resulted in grave repercussions for the Indian iron and steel industry. The industry touched the lowest capacity utilisation of 82 per cent in the past eight years. Lakhs of people lost the jobs due to shutdown of large scale sponge iron and mini steel plants in Karnataka due to severe shortage of iron ore,” said Vinod Nowal, president of Kisma and deputy managing director of JSW Steel Limited.

Nowal said that at present, the Indian steel industry is struggling to source their iron ore requirement. The industry imported almost four million tonnes of iron ore in FY13.

“In the near future, the iron ore production in the country is expected to remain at the same level of 140 million tonnes, which will be consumed by the domestic steel industry. In such a scenario, there is no iron ore left for export purpose,” he said in the memorandum to the steel and commerce ministries.

Promoting iron ore exports to control the current account deficit (CAD) is not a good idea, he pointed out. “The export realisation of the domestic iron ore miner is 70 per cent less than the domestic realisation because of the severe shortage of iron ore in the country. If we relax the export constraint of iron ore, this will impact the competitiveness of Indian steel industry adversely and flood in the imports of steel into the country, leading to further rise in the current account deficit.”

He sought the intervention of both the ministries and not to allow reduction in export duty of 30 per cent on iron ore. However, in order to control CAD, India should promote the exports of value-added products in place of raw materials.

“We can manufacture the cheapest steel and aluminium by utilising our domestic resources and export around 80 million tonnes of steel and 10 million tonnes of aluminium to the world market in place of exporting the iron ore and bauxite. Export of these two products alone would help in generating valuable foreign exchange revenues of approximately $85 billion and help contain current account deficit of about $80 billion and also generate large employment in the country,” Nowal added.