Finance Ministry to decide on removing iron ore import duty: Steel Ministry
New Delhi: Finance Ministry will take a call on withdrawing import duty of iron ore in the face of falling domestic supplies that is forcing steel makers to buy the raw material from overseas market, a Steel Ministry official said. JSW Steel is resorting to imports of around 0.5 MT a month following the paucity of iron ore in domestic market.
Others like Tata Steel, which never had any crunch to run its Jamshedpur plant due to iron ore shortage, may also follow suit after its Noamundi mine in Jharkhand was recently closed by the state. "We understand the situation. We have already written to the Finance Ministry to bring the import duty on iron ore down to zero. It is for them to take a call on the issue," a senior Steel Ministry official said.
In a memorandum to Commerce Minister Nirmala Sitharaman, industry body Assocham had recently said the drop in domestic iron ore production was forcing steel industry to import iron ore from international markets. Assocham also suggested that the government may consider reducing import duty on iron ore to zero from the current levy of 2.5 per cent.
India's iron ore production has come down to an all-time low of 144 million tonnes (MT) in FY'14 from the peak level of 218 MT in FY'10. The production is expected to drop further to a level of 90-95 MT in current fiscal. Miners' body FIMI also estimated that the country might end up importing around 15 MT of iron ore in current fiscal and become a net importer with just 8-9 MT exports.
Domestic iron ore availability has been the most prized advantage of the steel makers in India. The paucity of supply and consequent imports might mar the prospect of many firms, hitting the prospect of having 300 MT capacity by 2025 from around 100 MT now. The lower price of the key steel-making input, which has fallen to its five-year low in recent times to around USD 83 a tonne, might provide some cushion to domestic steel makers, but infrastructure bottlenecks, however, is a drag.
