Finmin refuses to withdraw export duty on iron ore

Written by Abhishek Anand | New Delhi, Jul 30 | Updated: Jul 31 2007, 04:04am hrs
The finance ministry has turned down the mining ministrys demand to withdraw the export duty imposed on iron ore export. This comes after the Group of Ministers (GoM) decided not to impose any cap on the export of iron ore.

Finance minister P Chidambaram in his Budget proposal had initially imposed an export duty of Rs 300 per tonne but subsequently made a rollback to Rs 50 for iron ore with ferrous content less than 62%, while retaining Rs 300 for iron ore with more than 62% ferrous content.

GoM on new mineral policy decided against allowing any cap on iron ore export. But at the same time, it has decided to disincentives export of precious natural resource through fiscal measures. Thus it is highly unlikely that any export duty cut will happen in the near future, a senior steel ministry official said.

The mining industry had exported about 90 million tonne of iron-ore in 2006-07. Another senior official confirmed the steel official version and said, In the meeting of GoM, the finance ministry stated that if the countrys valuable natural resources is allowed to be exported, then India should get more revenue. Thus, chances of export duty rollback are very slim. The mining industry has been demanding a complete rollback of the budget proposals. The industry believes that iron ore exports are declining as a result of the export duty. According to estimates, if exports slump by 30%, miners would suffer a loss of Rs 4,554 crore. Additionally, miners claim that exporters are losing Rs 200 to Rs 300 per tonne owing to rupee appreciation. Steel industry, too, has been demanding a phase out of iron ore export, as it believes that with new planned expansion in steel sector, countrys iron ore reserves will not last more than 20 to 25 years.