Government removes export duty on iron ore pellets

KOLKATA: The government has removed the 5 per cent export duty on iron ore pellets as it meets yet another demand of steel and mining sector companies reeling under low demand and weak prices. It follows a series of strong measures announced by the NDA government since September 2015 to protect the steel industry from rising imports including safeguard duty, hike in customs duty and imposition of stringent quality norms on imported steel. The step is expected to benefit the likes of pellet makers which includes top miners as well as leading steel players. The 5 per cent export duty on iron ore pellets was imposed in 2014.

"The Central Government being satisfied that it is necessary in public interest so to do, hereby makes following further amendments in the notification of the Government of India in Ministry of Finance (Department of Revenue) No. 27/2011- Customs, dated the 1st March, 2011," the Central Board for Excise and Customs ( CBEC) said in a notification. In the said notification, in the Table, against serial number 23 (Iron Ore Pellets), in column (4), for the entry "5 per cent", the entry "Nil" shall be substituted, it added.

More than half of installed domestic pellet making capacity of 90 million tonne is lying unutilized due to poor offtake. Reeling under low demand and low capacity utilisation, pellet manufacturers, in particular, have been insisting on removal of export duty and revision in distance based charges, while looking for ways find a market in exports.

In September 2015, the Railways slashed rates for distance based charges on movement of iron ore for exports for the first time in three years to a flat rate of Rs 300 o revive exports. The move was part of the Railways Dynamic Freight Pricing Policy that calibrates market price of commodities to the railway freight rates. Pellet Manufacturers’ Association of India (PMAI) which represents the industry interests have been arguing that the needs to distinguish between a mined product like calibrated lump ore/lumps and pellets, which is a manufactured product and attracts excise duty.

In October 2015, the government reduced the export duty on export of iron by MMTC (only NMDC origin) to Japan and South Korea under the Long Term Agreement (LTA), from 30 per cent to 10 per cent, up to and inclusive of March 31, 2018.