New Delhi: The government is unlikely to roll back the duty of Rs300 per metric tonne on export of iron ore imposed in Budget 2007-08, despite intense lobbying by the mining industry.
“Armed with steel industry’s assurance to hold prices for the time being and raise production by 40-45 million tonnes (MT) in next three years, Finance Minister P. Chidambaram will find it easy to convince the Parliament about the need of export duty,” a senior Finance Ministry official told PTI.
Ministry sources said steel industry has given a “commitment” to Chidambaram to increase production capacity to 80-85 MT by 2010 from the present level of around 40 MT.
The increased production will not only help sustain 8% to 9% GDP growth, but also partly consume domestic iron ore production.
Steel firms have been arguing that iron ore, the key input for producing steel, should not be exported, but mineral producers say they get a better price overseas. In a bid to discourage exports, the government imposed a duty of Rs300 per tonne on ore export from 1 March.
India has 23 billion tonnes of iron ore reserves and exported about 90 million tonnes last year, most of it to China which aims to double its steel production to 800 MT in the next few years.
Sources said state-run SAIL has assured to raising its capacity from 14.5 MT to 20 MT. JSW would increase output from 3.8 MT to 6.2 MT, Jindal Steel and Power from 3 MT to 9 MT, Tata Steel from 5 MT to 12 MT and Essar from 4.6 MT to 9 MT.
In addition, sponge iron industry has assured raising its capacity by 10 MT to 22 MT, they said.
Steel industry representatives led by Assocham Senior Vice President Sajjan Jindal
recently urged Chidambaram that government should rather cut down iron ore exports by 15% annually to maintain raw material prices.
Steel Ministry has also supported the export duty on iron ore, saying there was need to bring down iron ore exports over the next 3 to 5 years.
Besides, the Competition Commission of India wrote to Prime Minister’s Office suggesting that iron ore export may be freezed at present level, while value addition should be promoted in the country.
In a meeting with Home Minister Shivraj Patil, who heads a Group of Ministers on mining, steel manufacturers pressed for not only maintaining the iron export duty, but to raise it to Rs600 per metric tonne.
The industry also sought a simplified mining policy that could facilitate raising steel capacity to 200 MT by 2020 at an estimated investment of Rs300,000 crore.
“China has plans to raise its steel production from 400 MT to 800 MT, while importing iron ore from India and other countries. The government should not reduce export duty under any pressure, otherwise India may become a steel importer in near future,” a steel industry player said.