The mining industry has sought a cut in export duty on iron ore, currently pegged at 30 per cent. Late December, the Government had hiked the export duty on iron ore fines and lumps to 30 per cent from the earlier 20 per cent.
Such duty hikes, the second in fiscal 2011-12, had rendered the Indian iron ore uncompetitive in the global market thereby affecting exports, the industry claims, adding that the duty hike has also hit the profitability of Indian miners.
In a letter to the Finance Minister, Mr Pranab Mukherjee, on Monday, the Federation of Indian Mineral Industries (FIMI) said the duty hike was counter productive for all concerned, including the Central Government.
FIMI claimed that the Centre was losing on export duty due to reduced exports, whereas the States were earning less royalty revenues due to reduced output. Also, the earnings of the Railways and the Ports were impacted due to lower traffic volumes during the year.
“The uncertainty in fiscal regime is impacting the foreign direct investment and investment in exploration,” FIMI said seeking a roll back of the duty hike on all categories of iron ores including the fines and lumps.
Iron ore exports for 2011-12 are estimated at around 50 million tonnes, down 50 per cent from the previous year's 97.64 million tonnes. The trend is largely attributed to export duty hikes, FIMI said.
Besides, the curb on mining in Karnataka has also added to lower exports. FIMI also said that bulk of India's iron ore exports were fines, which are hardly used by the domestic steel industry.