Further hike in iron ore export duty unlikely in budget

New Delhi: The iron ore industry is unlikely to face a further hike in export duty on their produce in the upcoming Budget, according to the Steel Ministry.

However, this is unlikely to provide much relief to the miners, whose margins are already under pressure due to the latest hike in export duty on this key steel-making ingredient to 30 per cent.

Talking to PTI, a senior Steel Ministry official said so far, there has been no discussion on raising the duty on iron ore exports and this is not likely to happen in the forthcoming Budget since iron ore miners are already paying 30 per cent duty on overseas shipments.

[caption id=“attachment_183836” align=“alignleft” width=“380” caption=“The government had increased export duty on both lumps and fines to 20 per cent from 15 per cent and 5 per cent, respectively, in the Budget for 2011-12. Reuters”]  [/caption]

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The government had increased export duty on both lumps and fines to 20 percent from 15 percent and 5 percent, respectively, in the Budget for 2011-12. Subsequently, the rates were increased again toward the end of December last year, when the government raised it to 30 percent for both varieties of iron ore.

However, the official justified the previous hikes,saying that even after levying duties, the huge margins enjoyed by iron ore miners were too high to bring exports to a standstill.

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Meanwhile, the Federation of Indian Mineral Industries, which had written to the Finance Ministry urging the abolition of export duty on iron ore fines and a reduction in duty on lumps to 5 percent, said Indian mining firms were being shifted into the non-competitive zone on the cost curve in global markets as a result of the repeated hikes.

“Export duty on iron ore fines should be abolished since there is no technology in India to use the low-grades fines and (duty on) lumps should be reduced to 5 percent since it is against free trade and no steel plant is starved of iron ore,” FIMI Secretary General R K Sharma said. India, the world’s third-largest iron ore exporter, shipped 117.3 million tonnes of iron ore overseas in 2009-10 and 70-80 percent of this was in the form of fines, which do not have many takers among domestic steel-makers.

In 2010-11, iron ore exports from the country fell to 97.64 million tonnes and in the first eight months of the current fiscal, exports dipped by a little over 28 percent to 40 million tonnes vis-a-vis the same period last fiscal.

PTI