Export duty on high-grade iron ore to remain unchanged

2016-17 Budget had removed export duty for iron ore lumps and fines with iron content of less than 30%

The Union Ministry of Mines has ruled out the possibility of any cut in export duty on high-grade iron ore lumps, dashing hopes of exporters. “At present, the duty is 30 per cent. Although we intend to reduce it, there is a strong protest from steel and pellet makers and also from the sponge iron industry. Keeping this in view, there would be no cut in export duty of high-grade ore,” said mines secretary Balvinder Kumar.

The 2016-17 Budget removed export duty on iron ore lumps and fines with iron content of less than 30 per cent. While the move is expected to incentivise exports from Goa, it has failed to cheer exporters in Odisha.
 
In iron ore rich states like Odisha and Jharkhand, the inventory has been building up. As on end-March, iron ore stock (of lumps and fines) in Odisha was 76.9 million tonnes (mt) and 24.7mt in Jharkhand.

The Federation of Indian Mineral Industries (Fimi) estimates 85 mt reserves of fines, for which there are hardly any takers. The domestic demand from steel, sponge iron and pellet industries is not adequate to absorb the production, resulting in continuous addition to the stockpile of ore. Fimi suggests the only remedy for clearing the stockpile is an export outlet. Hence, it pressed for abolition of export duty on all grades of ore.

On re-imposition of export duty on chrome ore and chrome ore concentrates, the ministry is yet to take a decision.

“There have been representations from different stakeholders (on re-imposition of export duty). The government is still examining the issue,” Kumar said.

The Union government had eliminated the 30 per cent export duty on chrome ore and chrome ore concentrates. The decision was a setback to domestic ferro chrome makers who fear dumping of cheaper ferro chrome from China and Malaysia, killing value addition.

India’s export of chrome ore reduced from 33.28 per cent of annual output in 2007 to 4.89 per cent in 2014. However, this trend is likely to be reversed with the removal of export duty. Ferro chrome makers have pleaded to the Union government to roll back its decision of lifting export duty on chrome ore.