More importantly, the CoS has applied brakes on the multi-million dollar domestic mining industry’s free run on iron ore exports by endorsing the Steel Ministry’s proposal to impose 15 per cent ad valorem duty on its exports. “The mining companies will take a combined hit of around Rs 8,000-10,000 crore,” Federation of Indian Mineral Industries (FIMI) secretary general R K Sharma said. The Federation of Indian Chambers of Commerce and Industry (Ficci) has said that the export duty would affect prospective investments worth Rs 1 lakh crore. In a representation to finance minister P Chidambaram, it said that the government’s decision would not only affect revenues of steel companies, but also their prospective investment plans.

It noted that performance of the steel sector has shown signs of a slowdown, with production of finished steel growing by a meagre 5.1 per cent in April-March 2007-08 compared with a 13.1 per cent increase in the previous fiscal. Ficci observed that the Reserve Bank of India (RBI), in its survey, found that the gross profit margin ratios of 105 iron and steel companies declined in the first quarter of this fiscal vis-a-vis the first quarter of the last financial year.