The government has removed the 5% 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 iron & 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 pellet makers, which includes top miners, as well as leading steel players. The 5% 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 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. 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. Reacting to Tuesday's move, Deepak Bhatnagar, Secretary General, Pellet Manufacturers' Association of India said: "Industry has been pursuing the withdrawal of the export since 2014 when it was levied. This levy has irreparably hurt the pellet industry dropping the capacity utilisation to an abysmal level of 35%.
Pellet prices have dropped from US$ 130 per tonne when the export duty was levied (Jan'14) to US$ 59 per tonne CFR now, making even exports nonviable. While industry lost a golden opportunity to export, the country lost an opportunity to earn foreign exchange." Terming the imposition of 5% export duty on pellets in January 2014 as a "retrograde" step, PMAI urged the government to take immediate remedial measures by removal of distance based charges (DBC) for movement of pellets as well as changing the classification for movement to class 140 which is applicable for manufactured, and finished products like cement. "Right now, the classification is that of iron ore, which is not correct as pellets are a finished product," it said in a statement.
Source: economictimes.indiatimes