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Karnataka CM H D Kumaraswamy seeks Narendra Modi's intervention on iron ore import, increase in basic customs duty on mineral

New Delhi: Karnataka Chief Minister H D Kumaraswamy has written a letter to Prime Minister Narendra Modi, seeking intervention in iron import and increase basic customs duty on the mineral.

In the letter, the CM said Karnataka was third-largest producer of iron ore — a key raw material used in steelmaking — and the steel producers are importing the ore at a time when the country is facing a large trade deficit.

"The status of Karnataka iron ore is unique with the Supreme Court capping the annual production and restricting the sale among end-users only through e-auction, the letter dater 19 November said.

 Karnataka CM H D Kumaraswamy seeks Narendra Modis intervention on iron ore import, increase in basic customs duty on mineral

File image of Karnataka chief minister HD Kumaraswamy. AP

"This has led to a situation where a huge quantity put up for sale on e-auction platform remains unsold. We see steel companies are importing a huge quantity of iron ore...when the country is facing large trade deficit," it said.

Seeking the PM's intervention, Kumaraswamy said he requests to suitably raise the import duty on iron ore and pellets.

The "very low" import duty of 2.5 percent encourages steel players to go for import rather than utilising the local ore, he said.

"The state has already lost more than Rs 600 crore during last financial year and the current year because of import... The unsold stock may lead to closure of mine operations," the CM stated.

Earlier, apex mineral body Federation of Indian Mineral Industries (FIMI) sought government support to open up Karnataka's iron-ore rich mining industry, which cannot export the mineral due to the Supreme Court ruling.

In this regard, it also wrote letters to the ministries of steel, mines, and commerce, and the Niti Aayog.

The body requested the government to take immediate steps to encourage export of iron ore from the state and also demanded to increase the duty on iron ore and its pellets to 30 percent to check imports.

FIMI also said that a stock of 40 million tonne mined iron ore was lying unsold in Karnataka.

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Updated Date: Nov 26, 2018 15:12:02 IST