Iron ore exports to come down by up to 35%: FIMI
As a fallout of the duty hike on iron ore exports in the Budget, India's outbound shipment of the key steel making raw material will come down by up to 35%, miners' body the Federation of Indian Mineral Industries (FIMI) today said.
"Our logistics costs are already high. The rise in export duty will make it more uncompetitive. I sense iron ore exports from the country will dip by 30-35% on an annual basis as a result," FIMI President Siddharth Rungta told PTI.
Rungta said the organisation would request the government to reconsider its Budgetary proposal by highlighting possible fallouts of the duty hike move soon.
India, the world's third largest iron ore exporter, had shipped over 100 million tonne iron ore in 2009-10 and 70-80% of that is in the form of fines for which export duty has been raised four-times to 20%. For lumps, the duty has been upped to 20% from 15% earlier.
"Because of the hike in export duty, no fresh contracts are signed now. Only earlier contracts are being honoured. Though the impact of export duty hike is not being immediately felt, it will be felt within a month," he said.
Rungta said the hike in export duty would also lead to lower domestic production of the raw material resulting to an increase in price.
Though the cost of mining iron ore in India is more or less the same when compared with others in the global arena, handling and transportation cost here is far higher than other global producers.
While the Finance Minister Pranab Mukherjee justified the move to increase export duty on the pretext of ensuring raw material security, FIMI maintain there would be no dearth of iron ore in the country for at least next 200 years as India has sufficient reserves to feed the domestic plants.