On 15 October, 2013, Pellet Manufacturers' Association of India (PMAI) wrote to the Ministry of Railways, Ministry of Steel and Ministry of Commerce, for removal of Distance Based Charge (DBC) on Pellet moved by rail for other than domestic consumption.
Transportation through trucks is not feasible for such quantities.
It has requested the Ministry of Railways to withdraw the DBC on Pelletization Rail Traffic at the earliest so that this important and back end arm of the Iron and Steel sector receives necessary fillip and encouragement to scale up its operations and investments.
PMAI's estimation
DBC has made exports of Pellets unviable and thereby the country has lost the opportunity to increase the Foreign Exchange earnings, which is very crucial for the country in the current circumstances.
The association's estimation is that on account of this lost opportunity of around 10 million tonnes annually (it was around 6 million tonnes the year before 2009, when this surcharge was introduced), the country would have lost around 1600 million annually of precious foreign exchange.
It needs to be noted that the value addition of Iron ore fines through Pelletization, gives a nearly 35% higher per unit export price vis-a-vis export price of Iron ore fines, thereby increasing the foreign exchange earnings for the country.
This will ensure consonance between all aspects of Government Policy
According to PMAI, the country needs to encourage substantial investments in Pelletization, which is only possible if these units have the required flexibility to adjust their marketing mix between domestic sales and exports, which is currently not possible because of huge burden of railway freight on Pellet traffic, when destined for exports.
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