In a bid to increase forex earnings to curb the current account deficit, the government is exploring options to boost iron ore exports by incentivising them through a partial rollback of the 30% duty on the raw material. In recent inter-ministerial consultations with the steel and mines ministries, the commerce ministry has proposed reducing the 30% duty levied by the finance ministry in December 2011.
The finance ministry would soon decide on whether the proposed changes can give a boost to the iron ore sector, which is suffering from a high export duty and an overall slowdown, said a source.
The country’s leading mining companies have also sought Prime Minister’s intervention for a complete rollback of the duty. The mines ministry has also recommended a cut in duty on at least low-grade fines, which are not consumed by the domestic steel industry.
Iron ore production is expected to fall below 100 million tonne (mt) while exports may nosedive to a low of 7-8 mt in the current financial year due to delays in opening of mines in Karnataka coupled with the continued ban in Goa, an official of the mineral industry body, Fimi, said. He further added that despite the Supreme Court?s (SC) direction, things are moving very slowly in Karnataka as far as giving renewal to mines is concerned.
India was once the third-largest exporter of the steelmaking raw material, but shipments plunged more than 80% in three years to hit 18 million tonne last fiscal. The Prime Minister, in a recent high-level committee on manufacturing meeting, set an ambitious goal of 300 million tonne of steel production by 2025.