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With the general elections round the corner, the government’s move to bridge the current account deficit by imposing five per cent export duty on pellet has been put to test.
Kalyan Banerjee, Member of Parliament and Chairman of the standing committee on coal and steel, will place a report in Parliament seeking the rollback of the duty.
Speaking to Business Line over phone, Banerjee said, “The report seeking the rollback of export duty on pellets will be placed in Parliament and I cannot discuss the content of the report before that.”
The report was placed in Parliament on Tuesday.
Earlier, Banerjee had written to Minister of Steel Beni Prasad Verma to reconsider the government’s proposal as he has also received a letter from the Chairman and Managing Director of KIOCL, a wholly-owned government enterprise, requesting withdrawal of the export duty.
Referring to the standing committee’s earlier appreciation of the government for reducing import duty on plants and equipment from 7.5 per cent to 2.5 per cent and allowing pellets exports duty-free in the last budget, Banerjee in his communication to the Steel Minister said he is unable to understand the rationale behind imposing the export duty of five per cent now.
Based on the government’s incentives, the industry had invested ₹35,000 crore to increase pellet capacity from 23 million tonnes (mt) in 2011 to 80 mt in FY’14. Exports accounts for just about 1.67 per cent of the installed capacity.
“It is always desirable that government proceed on the basis of its promise. Since a large number of industries have made huge investments based on such promise, the government should not go back on its words,” he said.
Earlier, Commerce Secretary Rajeev Kher, in a similar communication to Sumit Bose, Finance Secretary, Department of Revenue, noted that in the last few years, the government had consciously created pellet capacity in the country.
Pellet exports help in earning foreign exchange without hurting the domestic steel industry and bridge the current account deficit. Therefore, the decision to impose export duty on pellets gives a contrary signal to the industry, he said.
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