Tomar in Catch-22 situation over iron ore export duty

Ahead of recommending proposals for the Union Budget, Steel and Mines Minister Narendra Singh Tomar is in a Catch-22 position on the vexed issue of export duty on iron ore, a key ingredient for steel-makers.
While domestic steel firms are in favour of maintaining 30 per cent export duty on iron ore due to supply "paucity", iron ore miners are of the view that high duty has made exports unviable resulting job and revenue losses.
"There are two issues - one is mining and one is steel. We need to reach to a conciliation," Tomar told PTI when asked to comment on the issue.

Asked about his probable recommendation, he said: "Let's see. We will examine the issue." He is expected to give his recommendations to the Finance Ministry soon.
The issue is most likely to find a prominent place in the wish-list of his Budget recommendations.
Tomar's task of striking a balance may be difficult because the two sectors were for the past 10 years represented by separate ministries and the Finance Ministry would have taken a call on the merits of their recommendations.

This time around two ministries while still separate, have been brought under the charge of one minister.
India, which was the third largest exporter of iron ore in not so distant past, has lost its ground to Australia and Brazil with exports plummeting to just 14.42 million tonnes in 2013-14 compared to 117.37 million tonnes in 2009-10. During the period, India's import of the key steel-making input has also gone up from 0.89 million tonnes to 5 million tonnes.

The export duty matter has become tricky for the new steel and mines minister as the previous government levied a five per cent export duty on iron ore pellets, which is nothing but agglomerated form of the raw material, with effect from January 27.
Industry association Assocham recently asked the government to raise export duty on iron ore pellets in order to ensure iron ore security to India's steel industry. It believes that iron ore exporters are taking advantage of the lower duty to dock products outside the country.
Pellet Manufacturers' Association of India (PMAI) in a meeting with the commerce ministry has petitioned for removal of 5 per cent export duty, claiming that it was choking the industry and would stunt growth.

In the 2011-12 Budget, government had pruned customs duty on capital goods required for setting up 'pelletisation and beneficiation' plants to 2.5 per cent from 7.5 per cent earlier to encourage use of low grade iron ore, main input for pellet manufacturing.
This move, according to the industry association, led to around Rs 25,000 crore investment that resulted 39 million tonnes (MT) hike in installed capacity to 62 MT in March 2014 from 23.5 MT in 2011-12.