'Any export duty hike on iron ore may stifle growth'

NEW DELHI: Fearing that the government might increase export duty on iron ore in the Budget, miners on Thursday said export duties proposed by certain quarters on the mineral could stifle growth of the industry and result in an annual revenue loss of Rs 2000-4000 crore to the exchequer.

"The royalty rates being proposed by certain quarters are incomprehensible. In the mineral-rich nations of the world, there are no export duties. The export tax they levy is far less than what has been proposed here," Federation of Indian Mineral Industries (FIMI) President Rahul N Baldota said here.

"The proposed royalty rates of 10 per cent and export duty of 15 per cent in India will be significantly higher than these major iron ore producing nations," he said and warned that any additional tax burden would marginalise their exports and could result in closure of many mines.

The Steel Ministry is understood to have favoured imposition of an ad valorem duty on export of iron ore. So far, Steel Minister Ram Vilas Paswan has been arguing that ore exports be allowed only after the needs of the domestic steel utilities have been taken care of.

Indian iron ore industry has always been at a disadvantage in comparison with Australian and Brazilian exporters due to higher inland logistics costs and inadequate port infrastructure leading to higher freight costs.

"The proposed royalty and export duty increases will push Indian exports to extreme right of the global cost curve. As the current supply crunch eases, Indian exporters will be marginalised and pushed out of the market," Baldota pointed out.