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Our Bureau

New Delhi, June 21

The Federation of Indian Mineral Industries (FIMI) has demanded that the Centre should withdraw the 15 per cent ad-valorem export duty imposed on iron ore last week.

Government has imposed this tax on June 13 with immediate effect, replacing the earlier fixed duty of Rs 300 a tonne for ore with more than 62 per cent iron and Rs 50 a tonne for ore, containing up to 62 per cent iron.

In a statement issued here on Thursday, the federation said that “if the objective of the Government was to ensure that iron ore is available to domestic steel industry by imposing this duty, it is not going to be achieved because what is being exported is the surplus iron ore and definitely not at the cost of the domestic steel industry.”

The President of the federation, Mr Rahul N. Baldota, said at a press conference that the new tax would lead to a situation where iron ore exports from India would become economically unviable, leading to fall in production because only iron ore fines, which have no domestic buyer, are exported.

He said that the railways have increased their freight by 70 per cent in the last two months and royalty payable to the States is also expected to be 10 per cent ad-valorem shortly.

Under this situation, additional 15 per cent ad valorem export duty will make Indian miners lose out on the Chinese market because since Chinese buyers would then prefer Australian suppliers, he added.

“The Chinese steel mills will not absorb the export duty on iron ore and hence the available window for large scale export to a market like China will be shut,” he said.

The federation is also peeved that the Government has used the additional impost on the mining industry to recoup the loss of revenues on account of withdrawal of export duty on flat steel products.

“It is only in the last three years that the mining industry is making profits, which the companies are reinvesting. Around 20 million tonnes steel making capacity will be put up by the mining companies within the next three to five years. All the plans will be out of place if the companies are starved of investible surplus,” Mr Baldota said.

More Stories on : Minerals | Industry Associations | Exports & Imports

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