KIOCL for withdrawal of export duty on pellets

According to Chatterjee, if export duty was not scrapped, it would be a serious problem for Rs 35,000 cr pellet industry

State-owned KIOCL Ltd is pushing for scrapping the five per cent export duty on iron ore pellets levied earlier this year.

"The new government has to take a call. We thought it would be scrapped in the vote-on-account, but it didn't happen. Now, we are hopeful that it will happen in the budget," KIOCL Ltd Chairman, Malay Chatterjee, said. He was speaking on the sidelines of the Indian Pellet & DRI Summit organised by SteelMint.

According to Chatterjee, if the export duty was not scrapped, it would be a serious problem for the Rs 35,000 crore pellet industry. “Banks have lent to these companies. If it doesn't happen then many of the loans would turn bad,” Chatterjee explained.

Addressing the summit, he said that most pellet plants were running at less than 80 per cent, anyway. Some were even running at 50 per cent capacity. Plus, they were faced with steep freight rates from Railways, which added to margin woes, contrary to the popular perception that margins were huge in pellets.

“The five per cent export duty aggravated the situation further for the pellet industry,” Chatterjee pointed out.

Several panelists at the seminar highlighted the importance of pellets in the context of the increasing steel capacity in the country. By the end of the present fiscal, India would have a steel capacity of 80 million tonnes and pellets were increasingly used as a key input.

Pellets have gained in popularity as steel makers are increasingly looking to utilise low grade iron ore.

There are around 36 pellet plants across the country having a combined capacity of 63 million tonnes. A huge expansion is also on the cards.