5% duty on exports retrograde step, say pellet makers

Our Bureau New Delhi | Updated on January 28, 2014 Published on January 28, 2014

At just over a million tonnes, pellet exports are only 1.2% of installed capacity

Iron ore pellet makers are miffed at the Government’s latest move to levy a 5 per cent duty on exports of the commodity.

“This is a retrograde step which will have far reaching implications. The duty has been levied without taking into consideration the views of pellet makers and is based on erroneous facts,” said SK Chatterjee, Secretary, Pellet Manufacturers Association of India in a statement.

The Finance Ministry on Monday announced a five per cent customs duty on export of pellets.

India has become the only country that is discouraging export of a high value added manufactured product, especially when it is not hurting the domestic market, Chatterjee added.

The pellet makers claimed that pellet exports at just over a million tonnes were about 1.2 per cent of the country's installed capacity currently.

Capacity creation

The pellet manufacturing capacity, which stood at 28 million tonnes in 2010-11, has gone up to 60 million tonnes and total investments were estimated at over Rs 30,000 crore.

The Government had encouraged capacity creation in iron ore pellets, a move that was aimed at utilising the low-grade iron ore fines, traditionally considered a mining waste in India.

Moreover, the gradual depletion of high grade reserves had prompted the steel makers and mineral companies to go for processing technologies.

Steel makers

Among the steel makers who have set up — and were in the process of setting up — pellet making capacities include Jindal Steel, SAIL, Essar Steel and KIOCL.

Pellet makers claim their current capacity utilisation is less than 50 per cent owing to the lower off take by the steel industry. Pellet makers are already paying three times more rail freight for pellet meant for exports.

This additional levy will kill the industry, they said, urging the Government to exempt pellet from exports.

Industry body Assocham had urged the Government to impose 30 per cent duty on exports of pellets to ensure higher availability of raw material for domestic steel industry as the production of iron ore had declined in the current year.

Published on January 28, 2014
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