Economy

Rail freight hike to add to iron ore exporters' woes

Our Bureau New Delhi | Updated on March 03, 2011 Published on March 03, 2011

Iron ore exporters have been hit hard for the second time this week with the Railways increasing the transportation charges by Rs 100 a tonne.

Earlier on Monday, the Finance Minister had increased the duty on iron ore exports to 20 per cent on all grades.

Iron ore exporters now have to pay a distance-based charge of Rs 1,600 for transporting a tonne of iron ore by rail. This is the second time that Railways has increased such distance-based charges, which is levied over and above the basic freight rates, in the past two months.

In January, the Railways had increased the rates by Rs 500 to Rs 1,500 a tonne.

Tight Margins

“Exports will come to a halt,” said Mr R.K. Sharma, Secretary General, Federation of Indian Mineral Industries (FIMI). “The latest hike will further squeeze the margins of exporters,” he added.

Faced with a dwindling demand and increased duties on exports, the Indian iron ore exporters are already under pressure.

They feel that the recent hike in export duty on iron ore fines and lumps to 20 per cent will make the exports unviable.

Iron ore exports for April 2010-January 2011 were down 18 per cent to 75.1 million tonnes as against 91.7 million tonnes in the corresponding period last year.

Defending the move to hike charges on iron ore export traffic, the Railway Board Chairman, Mr Vivek Sahai, recently said: “We track the price of iron ore in the international market. When the prices go up, we hike the charges. Moreover, despite the hike, we have been loading more and more iron ore traffic.”

“Through such a move (of increasing the freight charges in line with iron ore prices in the international market), we have mobilised Rs 1,700 crore in the current fiscal till date,” Mr Sahai had said.

Till January, the Railways loaded 21.23 million tonne of iron ore for export, a 43 per cent decline over the corresponding period last fiscal.

However, it registered Rs 3,925.11 crore of revenue from iron ore export movement, up almost 3 per cent over the corresponding period last fiscal.

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Published on March 03, 2011
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