October 12, 2008

Assocham suggests 35% duty on iron ore export

Industry body ASSOCHAM has suggested a 35% duty on iron ore export, saying that pre tax profit on export of typical grade iron ore has risen from INR 1,100 per tonne in February 2007 to INR 4,000 per tonne in December 2007.

Alleging that exporters are misrepresenting the current high prices of iron ore as a short term phenomenon, it sought 35% ad valorem duty on freight on board price of iron ore exports. It added that the current demand and higher prices of iron ore is an outcome of the increase in global steel production.

ASSOCHAM spokesman said that, in the current financial year also, iron ore export has increased by 5% from all Indian ports other than Goa, where the port loader was not operational and it exports only low grade iron ore. Thereby the purpose of conservation of mineral resources has been defeated.
Indian government, in the last Budget, had announced INR 300 per tonne export duty on iron ore, which was later reduced the duty on export of low grade ore to INR 50 per tonne. Assocham said “Such a duty structure has lost its relevance as 33% of the export volume has shifted from high grade to low grade ore, argued, asking for ad valorem duty instead of the current specific tax.”

The chamber said that iron ore exports from India has increased by 101% during the last five years and has touched 95 million tonne during 2006-07 from 45 million tonne in 2002-03 and is expected to grow at a much faster rate.