Indian central government has recently revised the distance based charges (DBC) on export of iron ore. These charges will be applicable on all iron & steel and cement manufacturing units, for iron ore exports from India. These charges will not be applicable on transport of iron ore for domestic consumption. Charges will come into force from 08 Sept’15 and will be valid till 31 Mar’16.
The government last revised these DBC charges on 05 Mar’12. Revised DBC levied on bookings for iron ore exports are as follows:-
|
Distance ( in Kms) |
DBC w.e.f 06 Mar’12 |
DBC w.e.f 08 Sept’ 2015 to 31 Mar’16 |
| 0-200 | 125% of Base Freight Rate plus INR 1,125 | 300 |
| 201-300 | 90% of Base Freight Rate plus INR 1,125 | 300 |
| 301-400 | 75% of Base Freight Rate plus INR 1,125 | 300 |
| 401-500 | 45% of Base Freight Rate plus INR 1,125 | 300 |
| 501-600 | 25% of Base Freight Rate plus INR 1,125 | 300 |
| 601-700 | 10% of Base Freight Rate plus INR 1,125 | 300 |
| >700 | INR 1,125 only | 300 |
Source: Indian Railways, SteelMint Research
Impact of revised DBC on iron ore exports from India
As per the new freight rate circular, DBC will be charged at a single rate of INR 300/MT for distance ranging from 0 to more than 700 kms.
| State | Port | Distance (in kms) | Previous Freight | New Freight | Change |
| Barbil (Odisha) | Paradip | 361 | 2,400 | 1,100 | -1,300 |
| Vizag | 772 | 2,600 | 1,700 | -900 | |
| Haldia | 410 | 2,475 | 1,100 | -1,375 | |
| NMDC | Vizag | 553 | 2,550 | 1,400 | -1,150 |
Source: SteelMint Research
As per SteelMint’s analysis, iron ore exports from NMDC through Vizag Port will be cheaper by INR 1,150/MT. On similar lines, export from Odisha (Barbil) via Paradip Port will be cheaper by INR 1,300/MT.
Link to the New Freight rate Circular for iron ore exports released by Indian Railways
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