Finance Ministry Urged to Withdraw Export Tax on Pig Iron

The Federation of Indian Chambers of Commerce & Industry has written a letter to the Union Ministry of Finance seeking the withdrawal of 15% export duty on pig iron. According to FICCI, export duty on pig iron will not lead to any benefits to the domestic steel industry as almost all major steel manufacturers have captive pig iron production. However, it will affect the merchant pig iron producers adversely to sell the surplus quantity in view of limited demand from domestic steel industry.FICCI claimed that “The domestic consumption for merchant pig iron has come down drastically from 9.90 million tonne in 2016-17 to 4.94 million tonne in 2021-22 due to drastic reduction with steel scrap substituting pig iron, which was made duty free in the 2021 Union Budget. As a result, domestic pig iron producers were forced to export, in order to utilize the production capacities at breakeven operations level.”FICCI also said that "The cost of coal constitutes nearly 50% of pig iron production cost. Therefore, domestic pig iron manufacturers are already struggling due to the rise in price of coking coal. Despite an increase in the cost of raw material, the industry is not able to increase prices due to weak domestic demand. At present, the domestic industry is working with thin and sometimes negative margins.”In 2021-22, India produced about 5.76 million tonne of merchant pig iron against the installed capacity of 7 million tonne.