FinMin signals: No to cutback on steel, yes to duty on iron ore

New Delhi, June 5: The Government has indicated that it is not inclined to roll back the export duty on flat steel products of upto 15 per cent as of now due to the huge financial burden arising out of surging Oil prices. While in the same breath it remained firm on imposing the 15 per cent ad valorem duty on iron ore export, a move that could help it garner about Rs 10,000 crore.

The Finance Ministry is understood to have agreed with the suggestions of the Committee of Secretaries (CoS) on imposing the ad valorem duty on ore export but has categorically ruled out withdrawing export duty on steel, saying it needed a revenue-neutral model to offset the losses incurred by the abolition of import duty on steel and by subsidies on petrol and diesel.

It is also understood that the Centre is mobilising more than Rs 10,000 crore from the export duty and hence not inclined to remove it.

And with the 15 per cent duty on exports of iron ore likely to mobilise another Rs 10,000 for the nation's exchequer it would be a welcome relief for the government in such pressing times, sources observed.

The high-powered CoS has however agreed to retain the export duty on long products used in the construction industry to ensure availability at affordable prices. The CoS decision was propelled by the 10 per cent dip in steel prices in the domestic market besides the pledge by steelmakers last month to cut prices by Rs 4,000 a tonne and their commitment to hold the price line for three months. In May, the government had imposed a 15 per cent export duty on semi-finished products and hot rolled coils/sheet, 10 per cent on cold rolled coils/sheets, pipes and tubes and 5 per cent export duty on galvanised steel in coil/sheet form.

More importantly, the CoS suggested putting 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.

Money matters

•Centre is mobilising more than Rs 10,000 crore from the export duty, and hence is not inclined to scrap it

•With the 15 per cent duty on export of iron ore likely to mobilise another Rs 10,000, it would be a welcome relief in such pressing times

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