On June 28, the Associated Chambers of Commerce and Industry of India (ASSOCHAM) said that the freight rate for iron ore pellets being shipped for export should be at equal levels with that for domestic shipment.
ASSOCHAM suggests that, even if there is a surcharge imposed by the railways, it should be a percentage of a base rate and without having any fixed element, adding that the surcharge should be lower than basic freight rate.
ASSOCHAM also said that the domestic freight rate should not cross the threshold limit of 10 to 13 percent of product FOB value maximum. "The policy of railways to have specific a freight rate for shipment of pellets by combining basic freight rate with surcharge defies logic," said ASSOCHAM secretary general D.S. Rawat. "This has made exports non-competitive," he stated.
The Indian government recently removed all custom duties to promote export of value-added products like pellet; however, the domestic freight charge by the railways is 28-30 percent of the FOB price in the international market.