Tuesday, June 28,
The government had recently removed all custom duties to promote export of value added products like pellet. But domestic freight by the Railways is 28 to 30 per cent of the FoB price in international market.
Total logistic cost for Iron ore pellets in India is around 11 to 13 per cent compared with 8 to 10 per cent internationally. This has led to spiraling of road rates in iron ore and pellet producing areas to nearly Rs 2,500/MT for even short distance of 400 km.
These road rates are nearly equal to the rail freight rate of Rs 2,635/MT, making the movement of commodities very expensive.
Industry body like ASSOCHAM has said that freight rates for iron ore pellets being moved for export should be at par with that for domestic movement.
The domestic freight should not cross threshold limit of 10 to 13 per cent of the product Freight on board(FoB) value maximum. “The policy of Railways to have specific freight rate for movement of pellets by combining basic freight rate with surcharge defies logic,” said ASSOCHAM secretary general D.S. Rawat.
“This has made exports non-competitive”, Rawat added.
Source: The economic Times
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