Indian iron ore miners seek higher import duty on iron ore pellets

Thursday, 27 September 2018 17:03:49 (GMT+3)   |   Kolkata
       

The Indian iron ore mining industry has sought a hike in import duty on iron ore and iron ore pellets to 30 percent from 2.5 percent at present as part of the Indian government’s efforts to check the current account deficit (CAD), an official at the Federation of Indian Mineral Industries said on Thursday, September 27.

The official said that, while the government initiated measures to check imports of "non-essential" items on Wednesday this week and to control the CAD (the difference between foreign exchange inflow and outflow), it is contradictory that exports of high grade iron ore and fines, a foreign exchange earner, is subject to an export tax of 30 percent.

At the same time, several steel mills are spending foreign currency by importing large volumes of iron ore fines and pellets at a low import duty of 2.5 percent, he said.

It is pointed out that total Indian iron ore and pellet imports during the April-July period this year caused a foreign exchange outflow of an estimated $348 million.

India, traditionally a net exporter of iron ore, has seen a trend reversal with iron ore imports during the August-September period this year estimated at 6.4 million mt against exports of 2.5 million mt.

The FIMI has also sought fiscal incentive for miners to form a consortium and set up iron ore pelletization plants which will absorb the rising stockpile of low grade iron ore fines not finding buyers overseas and will also increase pellet exports from the country, leading to foreign exchange earnings.

In the southern Indian iron ore bearing state of Karnataka, three to four medium-scale miners have formed a consortium to construct a one million mt per year pelletization plant and, according to the FIMI, the government should incentivize such projects so as to increase domestic production, replacing imports and increase overseas shipments.

At present, total Indian iron ore pellet manufacturing capacity is estimated at 80 million mt per year and, according to the Pellet Manufacturers Association of India (PMAI), these plants operate at capacity utilizations in the range of 50-60 percent, while steel mills are importing pellets at low import duties.


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