Fimi wants scrapping of export duty on iron ore fines

Says India is losing its competitiveness on iron ore rapidly in global markets

Miners' body Federation of Indian Mineral Industries (FIMI) has sought bringing down export duty on low-grade iron ore and pellets to nil and raising import duty on pellets to 30% in the Budget.

In a pre-Budget memorandum to government, FIMI said India is losing its competitiveness on iron ore rapidly in global markets as was evident from its share dipping to less than 2% in 2013 against 20% in 2008.

"Due to high incidence of export duty on iron ore, exports have declined from 117.37 million tonnes in 2009-10 to 14.42 million tonnes in 2013-14," it said.

India is likely to end current fiscal as a net importer of the key steel-making raw material.

Government has continuously increased export duty on iron ore from zero percent in 2008-09 to 5% in 2009-10 and further to 20% in March, 2011. In December 2011, it raised it again to 30%.

"Such a high duty has rendered exports unviable. A 30% duty on iron ore exports has been a deterrent to the effective functioning of the Indian mining industry," it said.

Indian steel-makers do not have the necessary technology to use fines or low-grade iron ore for making steel.

These firms mostly use lumps which have more iron content, Fimi said adding exports of fines are by compulsion and not by choice.

Secondary steel producers who account for nearly 60% of the India's total production have also resorted to cutting capacity utilisation due to shortage of lumps, FIMI said.

"Therefore, industry expects government to bring export duty on iron ore fines to nil," it said.

The industry association has also requested government to reduce export duty on iron ore pellet to zero% from 5% now.

Meanwhile, it also suggested raising import duty on iron ore pellets at par with the present export duty on iron ore.