New Delhi: Complimenting the finance minister on his proposal to impose a Rs300 per tonne duty on exports of iron ore, industry body Assocham has advocated that the government should further discourage such exports to conserve the country’s natural resources.
“Our endeavour should be to discourage export of any raw materials and rather strengthen our manufacturing base to generate employment opportunities and create wealth for Indians,” Assocham president Venugopal N. Dhoot said in a statement.
India exports 100 million tonnes of iron ore each year and the proposed duty is expected to generate Rs3,000 crore every year. The chamber said this amount should be utilized for the long-term exploration and expansion needs of the domestic industry.
State-owned iron export company National Mineral Development Corporation Ltd has declared 90% operating profit in the financial year 2006-07 in spite of exports on long-term contracts. The majority of iron-ore exports is on spot basis that indicates companies in this space are making even higher profits, the statement said.
The chamber estimates that iron-ore prices have registered unprecedented increase since 2004-05 on the back of huge demand from China and a buoyant steel industry. Prices have increased from 22.45% per tonne FOB (free on board) in the year 2004-05 to 50.25% in 2007-08. Long-term iron-ore prices have also seen an increase of 71% in 2005-06, 19.5% in 2006-07 and 9.5% in 2007-08.
It has suggested that iron-ore security is vital as India would be producing and consuming more than 250 million tonnes of steel in the near future. Various steel industries have already signed 140 MoUs for steel production. Most of them are pending due to non-availability of iron ore and land.