Hike in Iron Ore Export Duty Aimed at Domestic Value Addition: Assocham Close.

NEW DELHI: The government's decision to hike iron ore export duty to 30 per cent is aimed at promoting value addition to the mineral within the country to ensure steel demand is met through domestic production by conserving the key raw material, industry body Assocham today said.

"India exported iron ore worth USD 4.7 billion in 2010-11 and imported finished steel worth USD 11 billion, thus contributing negatively to widening trade deficit and draining foreign exchange reserves," Assocham said in a statement.

Conservation of iron ore is in the national interest as reserves may run out rapidly due to growth of the economy, it added.

The government had hiked export duty on iron ore to 30 per cent on December 30. It had raised export duty on both lumps and fines to 20 per cent in the Budget for the current fiscal to check indiscriminate exports and encourage domestic value addition.

"We have always advocated a complete ban on iron ore exports. However, discouraging them through fiscal measures is an appropriate solution to utilise large mining, infrastructure and port capacities created for iron ore," said Assocham Secretary General D S Rawat.

It is imperative that India conserves its iron ore resources to safeguard long-term sustainability of the steel industry, he added.

As per the industry body's estimates, a 9 per cent growth in GDP will "create demand for 113 million tonnes (MT) of steel and 206 MT of iron ore by 2016-17 as the country embarks on several infrastructure projects."

The country's current production of iron ore stands at 208 MT, of which 98 MT is exported.

Source : economictimes.indiatimes.com