The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has urged the Indian government to impose 30 percent export duty on iron ore pellets, fines and lumps with immediate effect to discourage circumvention of export duty and to increase iron ore availability for the domestic steel industry.
According to ASSOCHAM, iron ore production in India has declined by a significant margin of 14 percent to 70 million mt in the first half of the financial year 2013-14, from 82 million mt in the corresponding period last year. The industry body pointed out that, with iron ore exports rising by 129 percent quarter on quarter to 5.33 million mt in the second quarter of the current financial year, iron ore became a rare commodity for the domestic iron and steel industry.
ASSOCHAM said that the growth in iron ore exports is due to the massive difference between export duties on pellets and on iron ore, as there is 30 percent duty on iron ore lump and fines, whereas no duty is imposed on pellet exports. It added that iron ore producers in India are taking advantage of the zero export duty on pellets and are circumventing the export duty on iron ore through pellets.
While crude steel production in India has grown by three percent in the first half of FY 2013-14 compared to the same period of FY 2012-13, there has been a continuous growth in demand for steel in India, resulting in a significant upsurge in imports of steel and related commodities like scrap, direct reduced iron (DRI) and iron ore pellets.