On June 13, the Indian industry body ASSOCHAM called on the Indian Minister for Commerce and Industry Nirmala Sitharaman and submitted a memorandum, strongly suggesting the imposition of a 30 percent export duty on iron ore pellets in the interest of the domestic steel industry.
"As the export of iron ore pellets rose to a whopping 1.5 million metric tons in fiscal year 2013-14 as against nil in FY 2012-13, we have urged the ministry to levying export duty on iron ore pellets as in the case of iron ore fines and lumps in order to ensure iron ore security for India's steel industry," said senior ASSOCHAM managing committee member Ravi Wig who led the chamber's delegation.
"Presently, iron ore pellet attracts zero duty while the duty on iron ore (lumps and fines) export is 30 percent, therefore exporters are circumventing iron ore pellets' exports by paying only five percent export duty," highlighted The Associated Chambers of Commerce and Industry of India (ASSOCHAM) in a communication addressed to the Commerce and Industry Minister.
According to ASSOCHAM, iron ore production in India has fallen significantly during the course of the past few years, i.e., from a level of 218 million mt in 2009-10 to only 144 million mt in 2013-14 which is further expected to drop to 100 million mt in FY 2014-15 against demand of 140 million mt. "The drop in iron ore production is due to reduced or no production of iron ore from states like Goa, Karnataka and Odisha after the ban imposed by the Supreme Court," ASSOCHAM said.
At a meeting convened by the Commerce Ministry last week (June 5, 2014), ASSOCHAM had also suggested to the government that it should reduce the import duty on iron ore (lumps, fines and pellets) to zero from the currently levied 2.5 percent. "This shall help rectify this anomaly in the duty structure and safeguard the competitiveness of domestic steel industry."
Quashing the recent reports about approximately 120 million mt of iron ore stocks being available in India in different states, ASSOCHAM termed this as a myth and a misrepresentation of facts. "Even the iron ore prices in India have escalated by 20-25 percent, while globally prices have decreased by up to 30 percent since April 2013."
Due to unavailability of iron ore, there has been a sharp decline in steel capacity utilization which declined to 77 percent in FY 2013-14 from 88 percent in 2010-11, moreover, India imported 5.7 million mt of steel in FY 2013-14 to fulfill the domestic requirement.