Miners' body Federation of Indian Mineral Industries (FIMI) has pitched for withdrawal of export duty of 30% on exports of iron ore up to 62% Fe content as against 58% Fe in the Budget.
In a pre-Budget memorandum to the government, FIMI said the tax exemption will help the industry increase exports and earn enhanced foreign exchange. This will also help in liquidating a large extent of the huge stockpile of iron ore lying at the mine-heads. This will also help in increasing the production of iron ore in the country.
Since the Chinese steel mills get better grade iron ore at a lower price and cost of transportation and shipment being same, iron ore up to 58% is not in much demand in the international market, FIMI said. "Moreover, all the mines in Goa, which have been exporting iron ore with less than 58% Fe, are closed since March 2018. Hence, there is no export of such iron ore from Goa. The domestic demand of pellet and sponge iron as well as the pig iron industry is for iron ore containing above 62% Fe," FIMI said in its memorandum.
Due to the high incidence of export duty on iron ore, exports from India have declined from 117.37 million tonnes in 2009-10 to a meagre quantity of 4.50 million tonnes in 2015-16. However, in 2016-17, exports had increased to 30.48 million tonnes owing to the withdrawal of export duty on iron ore up to 58% Fe which was mainly produced in Goa and due to the exports from NMDC which had been granted export duty relief. The company is charged export duty at 10% on its exports. However, during the year 2018-19, the quantity of exports of iron ore declined drastically to 16.19 million tonnes.
Currently, there is a stockpile of 162.85 million tonnes of iron ore at mine-heads as on March 31, 2019, which is primarily on account of stocks in Jharkhand and Odisha. Most of the stock is in the grade of 58% Fe to 62% Fe.
The government has been raising export duty on iron ore from 5% in FY2010 to 20% in March 2011 and to 30% in December 2011, thereby making exports unviable. However, in the budget for 2016-17, the government abolished export duty only on iron ore up to 58% Fe and retained 30% on other grades.
Seeks exemption of duty on bauxite
The FIMI has also urged the government for exemption from 15% duty on bauxite exports. "While large capacity aluminium smelters have been commissioned for utilisation of metallurgical grade of bauxites, but there are very limited avenues for non-plant grade bauxite particularly of Gujarat state where mainly low-grade bauxite with Alumina in the range of 38-49% and more than 5% silica is produced," FIMI said.
Since the availability of low-grade Bauxite is much more than the domestic demand in the country, the same is being exported particularly from Maharashtra and Gujarat coastal regions. The export of low-grade Bauxite (Non-Metallurgical Grade) has been earning foreign exchange for the country besides effective utilisation and conservation of non-plant grade Bauxite. However, subsequent to the imposition of export duty of 15% on Bauxite, the production and export of Bauxite has adversely affected.
The quantum of exports of bauxite during the year 2015-16 was 8.91 million tonnes
which sharply declined to 1.56 million tonnes during the year 2018-19. It has further
steeply declined to an abysmal level of 0.36 million tonnes during the current financial
year 2019-20 (April-September), FIMI said.
With a view to having optimum utilisation of our low-grade mineral resources, it is
imperative that the duty imposed on export of Bauxite be withdrawn which will lead
to reopening of closed bauxite mines, employment restoration besides earning of
foreign exchange, the FIMI memorandum added.