Bhubaneswar: The Odisha Iron pellet industry is in dire straits due to stagnant domestic demand which is largely dependent on Sponge iron industry. High interest burden, higher cost of production and under utilization of existing capacity, and the recent 5% imposition on export duty by the Central Government has compounded its woes with industry observers saying that this could well be the last nail on the coffin.
The new levy has led to a situation where three units in Odisha are likely to shut down by March end, 2014. This is expected to render 10,000 people jobless as well as lead to significant loss to the exchequer in terms of excise duty revenue.
Such frequent flip flops in the policy making have put at risk over INR 35,000 crore of investments that have already been made by the industry. To put matters in perspective, Odisha accounts for the bulk of India’s production of Iron pellets. With an installed capacity of over 55 MnT pa in FY14, Odisha accounted almost 25% of total capacity. However in FY15, Indian pellet capacity is expected to touch over 80 MnT pa with major plants coming up in Odisha.
Recently, the Pellet Manufacturers’ Association of India (PMAI) has sought Odisha Government’s intervention to immediately withdraw export duty of 5% on Iron pellets levied by the Central Government. A Memorandum on this regard has been send by PMAI to Chief Minister Naveen Patnaik. The body has urged putting pressure on the UPA Government to save investments to the tune of INR 35, 000 crore in this sector.
SK Chatterjee, Secretary of PMAI, said, “The recent imposition of 5% export duty on pellets is like a killer blow. The u-turn of government policy change will lead to eventual shutdown of merchant beneficiation and pellet plants due to low demand of pellets in domestic market, since most of major private sector steel producers have come up with their own pellet plants.”
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