Terming imposition of 5 per cent duty on iron ore pellet exports as a "retrograde" step, pellet manufacturers' body PMAI today said the levy will have far reaching implications and would "kill" the industry.
"It is unfortunate that the government has decided to levy export duty of 5 per cent on pellet exports. This is a retrograde step which will have far-reaching implications and would kill the industry," Pellet Manufacturers Association of India (PMAI) said in a statement while demanding recall of the levy.
It said that current exports of pellets stand at barely over one million tonne and are just 1.2 per cent of the installed capacity. Exports have never hurt domestic steel industry, it added.
Stressing that total investment made in pellet industry is over Rs 30,000 crore while the current capacity utilisation of the industry is less than 50 per cent on account of lower offtake by steel companies, the PMAI has questioned the government as to why it was punishing the industry.
India has become the only country that is discouraging export of a high value-added manufacturing product especially when it is not hurting the domestic market.
Alleging that the step was initiated at the behest of some steel players, PMAI said, "Pellet manufacturers strongly feel that the government is playing into the hands of a handful of steel makers" and urged the government to reconsider the decision.
"Imposition of export duty on pellets ... Is completely unwarranted. The duty has been levied without taking into consideration the views of PMAI and is based on erroneous facts," PMAI Secretary S K Chatterjee said.
The body said that pellet makers were already paying three times the rail freight for pellet meant for exports and additional duty will make the survival difficult for manufacturers.
The government yesterday imposed a five per cent export duty on iron pellets, a critical raw material for the steel industry in view of domestic requirement.
Iron ore fines and lumps already attract an export duty of 30 per cent. Iron ore pellets were exempted from the duty as the exports were negligible in 2012-13.
"However, in April-November 2013, exports of iron ore pellets have risen sharply, causing an apprehension about shortage of iron ore in the country," the Finance Ministry has said.
However, the PMAI said any such step would be detrimental for industry as it was due to the encouragement by the government that the pellet capacity which was 28 million tonnes (mt) in 2011-12 has gone up to 60 mt.
