Arguing that the competitiveness of the Indian steel industry will be seriously jeopardised if iron ore exports continued unabated, the Steel Ministry has asked the Finance Ministry to impose a 10 per cent duty on export of all grades of iron ore with immediate effect.

The government had imposed an ad-valorem duty of 15 per cent on all grades of iron ore, but subsequently the duty on export of ore fines was amended to Rs 200 per tonne from October 2008. This was modified to 8 per cent ad valorem a month later. At present, export of fines does not attract any duty while export of ore lumps attracts a 5 per cent ad-valorem duty.

In a letter to Finance Minister Pranab Mukherjee, Steel Minister Virbhadra Singh also warned that if the present trend of iron ore exports continued, it may result in a steep increase in prices of ore for domestic steel industry, thus creating a pressure on steel prices in domestic market. “This may not be desirable in present circumstances,” Singh said.

According to Singh, the steel industry, already facing acute shortage of coking coal and natural gas, was frittering away its only advantage — of quality iron ore, by exporting almost 50 per cent of the total ore produced in the country. While ore exports dipped nearly 20 per cent between June and November last year, it started picking up in December 2008. It grew over 25 per cent in recent months, at a time when the country’s overall exports decelerated.

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