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Indian govt turns back on reducing iron-ore export duty

30th September 2013

By: Ajoy K Das

Creamer Media Correspondent

  

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KOLKATA (miningweekly.com) – India’s Finance Ministry has decided not to prune the iron-ore export duty from 30% to 20%, marking an U-turn on its previous stance and dampening sentiments in the mining sector.

Finance Minister P Chidambaram said over the weekend that there was no case for reducing the iron-ore export duty, without elaborating on the government’s change in stance on the issue.

Earlier, Chidambaram and the Indian Prime Minister Manmohan Singh had officials claim that the country needed to revive iron-ore exports to bolster overall exports, thereby increasing foreign exchange earnings and easing pressures arising from the current account deficit.

However, the Indian government had been divided on the export duty cut proposal, with the Ministry of Steel and domestic steel producers opposing the move based on sectoral interests, while various other Ministries such as Mines, Finance and Commerce favoured the move based on macroeconomic considerations.

According to the Mines Ministry, the duty cut would allow the country to push an additional 10-million tons of ore into international markets between October and March, even if the current mining ban in the two major producing provinces of Karnataka and Goa continued.

For their part, the Federation of India Mining Industries (FIMI), Indian miners and traders were hamstrung in leveraging the weak rupee since they were unable to plan mine production owing to uncertainties over duty rates.

Indian iron-ore exports have been falling steadily over the years in the wake of a ban on mining in key provinces owing to illegal mining and a high export levy.

Iron-ore production had fallen from 218.55-million tons in 2009/10 to 167.28-million tons in 2011/12. Exports were down from 117.37-million tons to 61.74-million tons. In 2013/14, iron-ore exports were unlikely to exceed 10-million tons, FIMI said.

Edited by Mariaan Webb
Creamer Media Contract Publishing Editor

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