Miners seek removal of export duty on iron ore, pellets

Currently there's a 30% and 5% export duty on iron ore and pellets respectively

With iron ore export hitting a low of 14.42 million tonnes (mt) in 2013-14, the mining sector has made a fresh plea before the new government to take measures to revive exports. The Federation of Indian Mineral Industries (Fimi) has urged the Ministry of Commerce to do away with the 30 per cent and five per cent export duty on iron ore and pellets, respectively, to enable them to export iron ore fines, for which there isn't much demand in the domestic market.

In a presentation before the ministry earlier this week, Fimi said as of March-end 2014, a total of 62 mt of iron ore fines were lying unused at various mine heads in the country. The production of iron ore is export-fed; with the decline in exports, production, too, is falling. Domestic demand for iron ore stands at 90-100 mt a year. Therefore, the government should encourage export of excess iron ore, said R K Sharma, secretary-general, Fimi.

He added the overall requirement of fines in India was 40-50 mt. “In case there is any shortage of iron ore in any part of the country, it is not because of incapacity of the industry to produce more, but because of the faulty policy of the Odisha government, which doesn’t allow transport of more than 50 per cent of the total production out of the state, despite the Centre’s directive to withdraw the order in February 2013,” Sharma said.

As the requirement of the steel industry in Odisha wasn’t enough to consume even half the production, iron ore was lying at mine heads, he said.

Fimi has also urged the government to increase the import duty on iron ore from 2.5 per cent to 30 per cent, so that steel makers use local unused iron ore fines. Instead of removing the duty on imported iron ore, the government should impose duty on import of finished steel, which would aid consumption of the material in the domestic market and consumers would benefit from low-cost steel products, Sharma said.

As a result of the 30 per cent duty on exports, neither had the steel sector gained due to a possible glut of iron ore, nor had the central and state governments benefited in terms of revenue, FIMI said.

“To fully utilise the resources, without detriment to the domestic steel sector, it is imperative to make Indian exports competitive by withdrawing export duty completely and bringing railway freight on par with domestic freight,” Sharma said.