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Further hike in iron ore export duty unlikely in budget

According to the steel ministry, the iron ore industry is unlikely to face a further hike in export duty on their produce in the upcoming Budget. However, this is unlikely to provide much relief to the miners, whose margins are already under pressure due to the latest hike in export duty on this key steel making ingredient to 30%

Talking to media, a senior steel ministry official said so far, there has been no discussion on raising the duty on iron ore exports and this is not likely to happen in the forthcoming Budget since iron ore miners are already paying 30% duty on overseas shipments.

The government had increased export duty on both lumps and fines to 20% from 15% and 5%respectively, in the Budget for 2011-12. Subsequently, the rates were increased again toward the end of December last year, when the government raised it to 30% for both varieties of iron ore.

However, the official justified the previous hikes, saying that even after levying duties, the huge margins enjoyed by iron ore miners were too high to bring exports to a standstill.

Meanwhile, the Federation of Indian Mineral Industries, which had written to the Finance Ministry urging the abolition of export duty on iron ore fines and a reduction in duty on lumps to 5%, said Indian mining firms were being shifted into the non competitive zone on the cost curve in global markets as a result of the repeated hikes.

Mr RK Sharma secretary general of FIMI said that "Export duty on iron ore fines should be abolished since there is no technology in India to use the low grades fines and (duty on) lumps should be reduced to 5 per cent since it is against free trade and no steel plant is starved of iron ore.”