The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has suggested that, as in the case of coal imports, iron ore imports should also be exempted from basic custom duty (BCD) and countervailing duty (CVD), in order to help revive the ailing domestic steel industry.
ASSOCHAM stated that domestic steel production in India is going through a hard time due to non-availability of iron ore, as a result of the production cap in the state of Karnataka and the iron ore mining ban which is in force in the state of Goa.
Given the current regulatory regime regarding iron ore mining, iron ore production is bound to remain sluggish, according to ASSOCHAM. Steel industry growth in India has slowed down because of the recent iron ore shortage, negatively affecting the investment proposals from major steel producers including POSCO, ArcelorMittal and domestic producer JSW, since the companies cannot ensure the required supply of iron ore. ASSOCHAM added that some producers are also resorting to acquisition of iron ore mining assets abroad which is exposing them to host country regulatory risk, such as the Australian government's mining tax.
As SteelOrbis previously reported, ArcelorMittal has not yet made any specific investment commitment for its six million mt steel plant project in the Bellary district of Karnataka since it does not have any access to iron ore and will not be able to make such an investment commitment until it gets raw material linkage.