Mines minister Dinsha Patel has asked finance minister P Chidambaram to immediately roll back the customs duty on iron ore from 30% to 15%. He argued, mineral exports have sharply declined leading to accumulation of over 100 million tonne of ore at various pitheads.
Patel in a letter to P Chidambaram contended that exports of iron ore, especially the fines have declined owing to stiff export duty and increased railway freight.
“This has led to an increase in mine head stocks from 88.8 million tonnes in 2010-11 to 104.2 million tonnes in 2011-12, adversely affecting the production of iron ore including lumps for the domestic market, even though availability of the mineral is not an issue,” he wrote.
“Consequently, exports have shown a drastic decline from 123.43 million tonnes in 2009-10 to 57 million tonnes in 2011-12, which has led to loss of not only customs duty to the Centre but also royalty revenues to the states,” Patel pointed out.
A senior steel ministry official said this recommendation, if implemented, will definitely hurt the domestic steel industry which is the main consumer of iron ore.
“It needs to be understood that steel production has become a costly exercise as raw material prices are shooting through the roof. So the duty has to be maintained a level which disincentivises exports,” he contended.
“Reduction of export duty is not in the interest of the domestic steel industry at this juncture. We are currently facing glut due to cheap imports putting the industry in jeopardy. It is an irony that India is importing steel from those nations where iron ore is exported. Thus the proposed reduction will be a double whammy which we can ill afford,” said Essar Steel chief executive Dilip Oommen.
Patel in a letter to P Chidambaram contended that exports of iron ore, especially the fines have declined owing to stiff export duty and increased railway freight.
“This has led to an increase in mine head stocks from 88.8 million tonnes in 2010-11 to 104.2 million tonnes in 2011-12, adversely affecting the production of iron ore including lumps for the domestic market, even though availability of the mineral is not an issue,” he wrote.
“Consequently, exports have shown a drastic decline from 123.43 million tonnes in 2009-10 to 57 million tonnes in 2011-12, which has led to loss of not only customs duty to the Centre but also royalty revenues to the states,” Patel pointed out.
A senior steel ministry official said this recommendation, if implemented, will definitely hurt the domestic steel industry which is the main consumer of iron ore.
“It needs to be understood that steel production has become a costly exercise as raw material prices are shooting through the roof. So the duty has to be maintained a level which disincentivises exports,” he contended.
“Reduction of export duty is not in the interest of the domestic steel industry at this juncture. We are currently facing glut due to cheap imports putting the industry in jeopardy. It is an irony that India is importing steel from those nations where iron ore is exported. Thus the proposed reduction will be a double whammy which we can ill afford,” said Essar Steel chief executive Dilip Oommen.
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