Govt cushions oil blow, hikes duty on iron ore exports

New Delhi, June 13 : In a move that will deal a blow to merchant miners and have a benign impact on inflation, which touched 8.75 per cent today, in the long term, the Government today imposed a 15-per cent ad valorem duty on iron ore exports. The hike will help it rake in Rs 8,000 crore to Rs 10,000 crore in a year and partially offset the Rs 22,660 crore hit it took following duty cuts on crude Oil and fuel products earlier this month.

Export duty on iron ore was so far levied at specific rates. While lumps and fines with iron content over 62 per cent attracted a duty of Rs 300 per tonne, the duty on fines with iron content up to 62 per cent was Rs 50 per tonne. A 15 per cent ad valorem duty on all iron ore exports is expected to address the demand-supply gap in the domestic steel industry by increasing its availability to companies at better prices for their proposed capacity addition plans. Iron ore exports have zoomed in the last four years from 75 million tonnes in 2004-05 to 102 MT in 2007-08.

Among those who will be hit by the duty are the miners of Bellary who are riding the export boom—including the Reddy brothers who reportedly bankrolled and facilitated the BJP’s electoral victory in several Karnataka districts.

The government also hiked the export duty on long steel products such as reinforcement bars and structural steel to 15 per cent from 10 per cent. This will also have an effect on the rising costs in the domestic construction industry.

Giving some relief to exporters of flat steel products used for making specialised components in the automobile and engineering sectors, the 15 per cent export duty has been rolled back. This decision comes following the Committee of Secretaries’ recommendation that since steel prices had dropped 10 per cent, exporters of specialised products should not be penalised.

At a meeting chaired by Cabinet Secretary K M Chandrasekhar on May 30, the CoS agreed to the Steel Ministry’s proposal on rolling back the export duty on flat steel products after observing that steel companies cut prices by Rs 4,000 a tonne and promised the Prime Minister to hold the price line for three months on May 7.

The government had imposed a 15-per cent export duty on semi-finished products and hot rolled coils/ sheet,...

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