Shenzhen (China): Amid a threat of Chinese boycott of Indian iron ore due to the imposition of a Rs300-per-tonne duty on Indian ore exports, Finance Minister P Chidambaram on 29 March defended the measure saying it will “conserve” the country’s raw materials for domestic steel units.
“There is no controversy. As I said in my budget speech, it (the tax) is intended to conserve raw materials for our own steel industry and at the same time, create some revenues taking note of the fact that the prices are ruling very high,” Chidambaram said here after inaugurating the full-fledged branch of Bank of India, where the Communist giant initiated the Special Economic Zone (SEZ) for the first time.
The new policy, announced by Chidambaram in February in his budget speech, is regarded as the first move by India to conserve scarce national resources.
But, Chinese importers have decided to boycott Indian iron ore in protest against Indian suppliers’ attempts to increase iron ore prices.
India announced a duty of Rs300 ($6.78) a tonne of ore exported from 1 March, and Chinese importers say Indian exporters intend to transfer the increased costs to them, even for contracts signed but not executed before March.
As the world’s biggest producer and consumer of steel, China imported a record 325 million tonnes of iron ore in 2006, of which 8.3 million tonnes came from India, according to media reports.
India is currently the third-largest exporter of iron ore to China after Australia and Brazil, and China is the largest buyer of Indian iron ore.