Boost to steel sector; hurdles for sericulture

Written by fe Bureau | Updated: Mar 1 2011, 07:35am hrs
The steel sector, especially in states like Karnataka, could get a much needed boost with the enhancement of export duty for all types of iron ore, which has been unified at 20% ad valorem. Earlier iron ore lumps attracted export duty of 15% and fines 5%. But at the same time, the Union Budget dealt a massive body blow to the sericulture sector as it has proposed to reduce customs duty on raw silk from 30% to 5%.

Iron ore is also exported in a value-added, pelletized form. Full exemption from export duty has been provided to iron ore pellets to encourage the value addition process for fines. Karnataka accounts for nearly 28% of annual iron exports from India, which ships 200 million tonne annually. Last year the Karnataka government had banned iron exports to control illegal mining and encourage value added activities to create job opportunities in the state.

Enhancing export duty will encourage oneself to add value to iron ore mined locally, said K Ranganath, chairman and managing director of KIOCL Ltd, the country's largest pellet producer.

Meanwhile, the sericulture sector in Karnataka is upset over the cut of customs duty from 30% to 5% on raw silk. Karnataka is the largest silk producer in the country accounting for 60% of total 19,500 tonne of silk annually produced in the country. This will lead to fall in raw silk price, which in turn will affect the sericulture farmer. Already, anticipating duty cut, the coocon prices tumbled to Rs 140 a kg from Rs 300 kg five days ago, said Ragupathy, Kolar District Reshme Belegarara Abhivrudhi Sangha, the association of sericulture farmers.