KOLKATA (miningweekly.com) - The Indian government has rejected the domestic steel industry’s demand that iron-ore imports be exempted from custom duty levies in the wake of a shortage of the raw material from domestic sources.

According to a Finance Ministry statement, the government did not find it feasible to scrap the current 2.5% import duty, as similar levies were also applicable to other ores and concentrates.

The government’s refusal to accede to scrapping or reducing the import duty on iron-ore was based on the Steel and Mines Ministries’ persistent contention that there was no shortage of iron-ore from domestic mines threatening the growth or profitability of steel production.

Mines Minister Dinsha Patel in March said “there will be no shortage of iron-ore even in 2020 when Indian steel production is projected to rise to 100-million tons a year”.

Steel Minister Beni Prasad Verma, in a recent statement, said that production of iron-ore in the country was in excess of demand and, overall, there was no scarcity of the raw material.

However, industry lobbying group Associated Chambers of Commerce and Industry in a presentation to the Finance Ministry said that exemption from customs duty on iron-ore was an imperative for the ailing domestic steel industry.

Indian steel producers like JSW Steel and Essar Steel, which have production facilities in proximity to ports, have already announced resorting to imported iron-ore to feed their plants with JSW planning shipments of around five-million tons during the current financial year.

According to data of the Federation of Indian Mineral Industries (FIMI), Indian iron-ore production had fallen from 218.55-million tons in 2009/10 to 207.15-million tons in 2010/11 and to 167.28-million tons in 2011/12, with exports falling from 117.37-million tons to 61.74-million tons over the three years.

Iron-ore exports during 2012/13 were estimated at 16.34-million tons, though total production during the year was not available.

According to FIMI, Indian imports of iron-ore during 2013/14 have been forecast at 12-million tons, up from around five-million tons in the previous year.