India once used to be the world’s 3rd largest Iron ore exporters, behind Australia & Brazil and exported over 117 MnT of ore in FY10. At that time, quite a few exporters from India invested in WIS (Wagon Investment Scheme) which assured them supply and discount on freight.
Indian Iron ore exports have been hurt badly in last few years due to differential pricing policy adopted by the Indian Railways, for exports and domestic consumption. Besides, an increase in export duty to 30% on both types of Iron ore lumps & fines, in December 2012, also impacted the sector. Country’s Iron ore exports have witnessed a great slump and are currently exporting only around 15 MnT in FY14.
“There is nothing left in Iron ore exports. 30% export duty and additional freight of USD 25-30 have killed Iron ore exports from India. We had invested in Wagon Investment Scheme (WIS), which assured supply and discount on freight for 10 years.
Since exports are not viable, we are looking at the domestic market. This is a win-win situation for both of us. Manufacturers get quick supply and we are able to use our quota of rakes,” said an Indian exporter based in Eastern India.
SteelMint assessed that some big plants like Essar, JSW Steels, Llyod, Uttam Galva, Electro Steel & BPIL have shown interest in souring Iron ore from exporters having rakes under WIS scheme.
What is WIS Scheme?
WIS is Wagon Investment Scheme, which was introduced in 2005 by Mr. Lalu Prasad Yadav, the Union Railway Minister, with an objective of PPP (Public Private Partnership). Under this scheme, the investor will get assured supply of 8 rakes every month with a discount of 10% on freight.
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