India: Iron ore exporters to government: Help us fight Chinese glut in global market
India’s iron ore exporters have asked the government to ease export duties so as to keep them competitive in the international export market vis-à-vis China. It complains that iron ore levied with the export duty of 30% makes it a no-contest against Chinese iron ore, which is readily available to the international industries at far cheaper prices. The Federation of … has asked the government to completely abolish 30% export duty on iron ore up to 62% iron content to boost sluggish exports.
The government had waived off export duty on iron ore up to Fe concentration of 58% in Budget 2016-17, but persisted with high export duty on heavy iron ore. The demand for iron ore with Fe content less than 58% is very less in the global market and hence government’s approach of waiving off duties for the iron ore turned out to be inefficient to boost growth in exports, FIMI said in a memo.
The higher duty on iron ore has resulted in piling up of 162.85 million tonnes of iron ore until 31-03-2019. Iron ores piled up in search of the better export environment are with Fe ranging from 58%-62%. However, FIMI seeks no change in export duty on iron ore beyond 62% Fe. Governments have increased export duties regularly. Export duty rose from 0% in FY 2009 to 5% in FY 2010 and then to 20% in March 2011 and finally to 30% in December 2011. Sustained pressure on the iron ore exports for its higher cost of export makes it an unsustainable model.
Higher export duty on iron ore led to a decline in exports from 117.37 million tonnes in 2009-10 4.50 million tonnes in 2015-16. Withdrawal of export duty in 2016-17 duty bore fruit ass export bounced back with 30.48 million tonnes increase in 2016-17. However, during the year 2018-19, the quantity of exports of iron ore declined drastically to 16.19 million tonnes from 30.48 million tonnes in 2016-17.
There is a stockpile of 162.85 million tonnes of iron ore at mine-heads in Odisha and Jharkhand. FIMI has an opinion that exemption of export duty will help the industry to clean up the stockpile and it will subsequently boost demands which will finally lead to further increase in production.
Source: Financial Express