Kalyan Banerjee headed parliamentary panel suggests rollback of 5% export duty on pellets

KOLKATA: The Parliamentary Standing Committee on Coal & Steel has suggested a rollback of 5% export duty on pellets. The panel, headed by Kalyan Banerjee of Trinamool Congress also recommended that the steel ministry should immediately take up the matter with the finance ministry.

It has said that the government “should continue with the earlier policy of zero export duty on pellets, till domestic steel plants upgrade technology and are in a position to fully consume domestically produced pellets.”

The parliamentary committee said this is to ensure that huge investments made in the pellet industry do not become non-productive assets and does not render thousands of people jobless.

The panel has also warned “the duty will sound the death knell for public sector Kudremukh Iron Ore Company (KIOCL), which focuses on export of pellets using low grade iron ore.”

Apparently, all the members of the committee were unanimous in their views about the need to roll back the duty. “It is always desirable that government should proceed on the basis of their promise since a large number of industries have made huge investments and the government should, not back out from their promise,” the commitee said.

With effect from January 27, government imposed a 5% export duty on iron ore pellets. According to the committee, the increase defied logic.

“The committee, therefore, recommends that ministry of steel should immediately take up the matter with finance ministry at the appropriate level and apprise them of the action taken on the matter,” it said. The move also puts a huge question mark over the very existence of state-owned KIOCL, an export-oriented unit, which operates the country’s largest merchant pellet plant.

With its mines closed due to environmental concerns, KIOCL has been relying on its pellet plant for survival. It had decided to focus on exports to take advantage of the fall of the rupee against the dollar. In a letter to the committee on February 5, chairman and managing director of KIOCL, Malay Chatterjee said: “The export tax on pellets will jeopardise the existence of the company.”