Economy

FIMI seeks scrapping iron ore export duty from Budget 2020

Our Bureau New Delhi | Updated on January 09, 2020 Published on January 09, 2020

The Federation of Indian Mineral Industries (FIMI) wants the Centre to scrap the 30 per cent export tax on iron ore and 15 per cent export tax on bauxite in the coming budget 2020-2021.

According to the industry body, there is a 30 per cent export duty on iron ore having Fe (iron) content above 58 per cent. “Government has abolished export duty only on iron ore up to 58 per cent Fe in the budget 2016-2017, but export duty continues to be 30 per cent on iron ore above 58 per cent Fe...During the year 2018-19, quantity of exports of iron ore declined drastically to 16.19 million tonnes from 30.48 million tonnes in 2016-2017.”

“There is stockpile of 162.85 (provisional) million tonnes of iron ore at mine-heads as on March 31, 2019, which is mainly accounted by Jharkhand and Odisha states. Most of the 162.85 million tonnes of iron ore, which is estimated to be lying at the mine heads is in the grade of 58 per cent Fe to 62 per cent Fe,” FIMI said.

The abolition of export duty up to 62 per cent Fe will help in liquidating the huge stockpile of iron ore at mine-heads which will result in enhanced foreign exchange earnings besides more production of iron ore in the country, the industry body noted.

‘Withdraw export duty on bauxite’

FIMI also sought a complete withdrawal of the 15 per cent export duty on bauxite.

“The quantum of exports of bauxite during the year 2015-2016 was 8.91 million tonnes which sharply declined to 1.56 million tonnes during the year 2018-2019. It has further steeply declined to an abysmal level of 0.36 million tonnes during current financial year 2019-2020 (April-September). With a view to have optimum utilisation of our low-grade mineral resources, it is imperative that the duty imposed on export of bauxite be withdrawn which will lead to reopening of closed bauxite mines,” FIMI said.

Other demand

In another demand, the industry body has sought a correction in inverted duty structure and a reduction in basic custom duty on critical raw materials for the aluminium industry.

“The cost of production of aluminium in India has substantially increased (around 30 per cent for the overall industry) over the past 3 to 5 years due to rising cost of critical raw materials, inverted duty structure on import of raw materials, increase in various taxes/cess like Coal Cess, Renewable Purchase Obligation (RPO), Electricity Duty and logistics costs among others,” FIMI said.

“The high import duties on raw materials is a huge disadvantage for domestic aluminium producers which are heavily dependent on imported raw materials. It results in Indian finished goods costlier and uncompetitive in international markets, rendering negative protection against cheaper imports of finished products, and discourages domestic value addition within the country,” the industry body noted.

Published on January 09, 2020
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