Indian Government imposed a duty of 5 per cent on exports of Iron Pellets on 27 Jan, 2014 owing to rising exports. Now Mines Minister writes to Finance Minister over taking back the duty.
Bhubaneswar: In a desperate attempt to revive the domestic Pellet industry, which is grappling for survival, the Minister of Mines Dinsha Patel, has written a letter to the Finance Minister P Chidambaram to roll back the 5% export duty imposed by the government. The letter also urges the Finance Ministry to consider the impact of its move on the sector, which is grappling with low domestic demand making exports crucial for survival of the industry.
In order to support the industry, various ministries like Commerce Ministry, Standing Committee of Parliament on Coal & Steel and various members of Parliament have come out in open to support the industry and have represented to the Steel Ministry & Finance Ministry to withdraw 5% export duty on Pellets. At stake, an investment of INR 35,000 Crore which has already been made by domestic & foreign players to build a capacity of 85 MnT pa, as well as 80,000 jobs both direct & indirect.
It is also surprising that such a severe step of imposing 5% export duty, which has a larger impact on the industry & economy, was taken without any consultation process.
The government and its agencies stand to lose substantial revenues by way of excise duty and other levies. Railways & ports will see huge revenue erosion by way of freight and handling charges. Other key stake holders are the banks & financial institutions, who have funded huge amounts for setting up these plants. This move by the government will be counterproductive for the GDP, as plants will shut down leading to revenue and jobs losses in the state. Frequent policy flip flops like re-introducing export duty which was abolished, will further discourage flow of FDI into the country and raise further questions about the growth of Indian Economy.
The industry had made such huge investments because of the encouragement provided by the Indian Government, so that low grade ore can be used to produce high value added products, which otherwise was an environmental hazard.
Given the grievous situation it is important that the Pellet industry survives and prospers in the larger interest of the country.
Letter attached.
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