Indian ferrous bodies seek withdrawal of export duties

Indian ferrous associations have asked the country's finance minister to withdraw the export taxes on steel and iron ore that were imposed unexpectedly from 22 May.

The Indian Steel Association (ISA) has asked the government to review and withdraw the policy, and has sought for a three-month buffer period to clear steel companies' booked orders without an export duty.

The country's finance minister Nirmala Sitharaman on 21 May announced an increase in export duty on nine steel products to 15pc from zero, with effect from 22 May. But it was not clear whether current bookings will be imposed with the duties.

"Vessels are already at port, loading is going on, material is getting out of customs and suddenly this duty comes. There is no system even at customs to incorporate these changes immediately, so all the port infrastructure, supply chain, everything is going to get choked now and come to a standstill. Some time has to be given to clear these orders," a steelmaker said.

The shipping bills which were already filed with customs and are in the clearance process will go without duty, while fresh bills will be filed with the duty, a market participant with knowledge of the matter said, adding they are not expecting any cancellations of exports, and hope to receive a window period to clear existing orders.

The ISA has highlighted to the government that India supplies steel to countries in the Middle East, southeast Asia and the EU, and the duties will impact the supply chains, allowing countries like China to take over India's hard-earned market share.

The steep 50pc export duties in iron ore and concentrates have prompted mining body the Federation of Indian Mineral Industries (FIMI) to also seek a review and a complete withdrawal of taxes.

FIMI has pointed out to the government that the domestic steel industry only consumes 62pc Fe iron ore and exports are the only option to sell low grades.

Iron ore-rich Goa's chief minister Pramod Sawant also visited finance minister Nirmala Sitharaman in New Delhi on 23 May and requested to consider the removal of the export tax to zero.

As Goa's ore is largely low grade (below 58pc Fe), and not processed for steel making in the country, the removal of duties is necessary for sustainable mining in the state, the chief minister's office said in a statement.

India's low-grade iron ore (58pc Fe) exports fell to 12.83mn t in 2021-22, from 34.26mn t in 2020-21, FIMI said, adding that an imposition of an export duty will eliminate low grade iron ore exports and impact the country's forex earnings.

The accumulation of low-grade iron ore fines in the mines will also lead to restricted availability of lumps in the market, which in turn will adversely impact the steel industry, while the export ban will also weigh on the Indian Bureau of Mines' average selling prices, and lower royalties and taxes collected by the state governments, it said.

By Sumita Layek