The Hindu Business Line : Iron ore exports rise despite imposition of duty

New Delhi, Sept. 15 Export of iron ore from India has actually gone up after the Government tried to restrict exports of this non-renewable natural resource by imposing export duty.

According to official figures available with the Ministry of Steel, iron ore export during April-August 2008 was 35.26 million tonnes, higher by 2.85 per cent compared with 34.28 million tonnes in the same period last year.

According to a note sent by the Ministry of Steel to the Cabinet Secretariat last week, the fixed export duty of Rs 300 a tonne and Rs 50 a tonne depending upon the grade of iron ore imposed on April 2007 “could not result in discouraging exports and in spite of this duty, export of iron ore increased from the level of 93.79 million tonnes in 2006-07 to 104.27 million tonnes in 2007-08.”

This means that exports grew by 11.17 per cent after tax was introduced as compared with 5.06 per cent growth in the previous year.

The fixed duty was replaced by a 15 per cent ad-valorem duty on all grades of iron ore with effect from June 13 this year. Exports have, however, continued to go up even after the ad-valorem tax.

The Steel Ministry has informed the Cabinet Secretariat that “this duty has also not apparently resulted in any decline in the level of export of iron ore.”

“In fact, export of iron ore from India from April 2008 to August 2008 increased to 35.26 million tonnes from a level of 34.28 million tonnes during the same period last year,” the Ministry note says.

The Cabinet Committee on Pricing is likely to review the impact of export duty on iron ore and how far it has been effective in softening of prices and increasing availability in the domestic market later this month, sources said.