KOLKATA (miningweekly.com) – The Indian government is mulling an increase in the iron-ore import duty to check rising inward shipments of the steelmaking raw material, as the domestic market faces a glut.
Government sources said that various industry stakeholders, including miners and the government of mineral-rich Karnataka, have petitioned for a hike in the import duty as the current rate of 2.5% had given rise to the trend of domestic steel companies resorting to imports to meet their requirements, while large stocks were lying unsold at pitheads across iron-ore-producing states.
The import duty hike was expected to be effected through the 2019/20 national Budget to be placed before Parliament on February 1.
The sources, however, said that the quantum of increase was still under discussion between various government entities, including the ministries of mines, steel and finance.
It might be noted that the Indian government was expected to place a “vote-on-account” before Parliament next month, instead of a full-fledged Budget as national elections were expected to be announced within the next few months. However, breaking with conventions of desisting from making any major fiscal changes in a vote-on-account statement, the government was expected to go head full steam with its major fiscal policy changes in the forthcoming account statement, the sources added.
The Federation of Indian Mineral Industries has suggested the imposition of a 30% import duty on iron-ore and pellets at par with the similar export duty prevalent on outward shipment of the steelmaking raw material.
According to industry estimates, Indian iron-ore imports during 2018/19 would touch 15-million tons, up 60% over the previous financial year.
Officials in the Karnataka government said that the Supreme Court had set a production ceiling of 30-million tons a year from all mines in the state. However, the stipulation that all production would have to be sold through competitive e-auctions had resulted in large stocks lying unsold with miners, as steel producers were often unwilling to accept the reserve price at the auction and/or get into competitive bids that drive up prices.