Indian Steel Ministry for Hike in Iron Ore Export Duty to 30%

Seeking to address the issue of availability of raw material for the domestic steel industry, the Steel Ministry is planning to take up with the Finance Ministry to hike the export duty on iron ore to 30 per cent from the current 20 per cent.

Steel Minister Beni Prasad Verma has already cleared the proposal in this connection and it will now be sent to the Finance Ministry for taking a positive view and getting it implemented. The fact sheet with the proposal sent by the Steel Ministry has mentioned the deteriorating level of raw material reserves, officials in the Ministry said.

In the budget presented by Finance Minister Pranab Mukherjee, the government had hiked the duty on iron ore, both fines and lumps, to 20 per cent to discourage exports and encourage value addition. The hike was not appreciated by the iron ore industry, which had dubbed it as the death knell for it, which depended on the livelihood of over a million people. After the duty hike, iron ore exports declined by about 22 per cent to 25.2 million tonnes in April-July, compared to the corresponding period last fiscal.

The Federation of the Indian Mineral Industries expects iron ore exports to fall by over 20 per cent to 75 million tonnes in the current fiscal from 98 million tonnes in 2010-11. Most exports go to China which does not allow the local industry there to dock the same to protect the interest of Chinese steel makers. "If that be so, why can't we stop exports of iron ore and prioritise the need of our own steel makers? India should not only increase the duty on iron ore, but it should put a blanket ban on shipments of the raw material," a senior official said. India's iron ore production is substantially higher than the domestic need.

Domestic steel demand is likely to jump by over 70 per cent to 113 million tonnes (mt) by the end of XII Plan (2012-17) as the infrastructure sector is projected to witness investments worth $1 trillion. A panel appointed by the Steel Ministry to assess demand and supply of steel in the XII Plan has estimated that steel demand would grow by 36 mt during the period to touch 113 mt in its final year. Total steel demand stood at 65.61 mt last fiscal.

The panel has estimated that steel demand would grow by 10.3 per cent annually if the country maintains a 9 per cent GDP growth rate, as projected by the Planning Commission in its Approach Paper for the XII Plan.