In a sign of support for the steel industry, the government has hiked the duty on all variants of iron ore. The move comes on the back of rising appeals to conserve India's domestic iron ore reserves for the anticipated boom in domestic steel demand, with capacities expected to double over the next three years.
The increase in export duty on iron ore exports will encourage value addition within the country. However, exemption of duty on pellets will reduce the scope for greater value-addition within the country, as the value addition at the pelletisation stage is much less compared to finished steel.
India is the third largest exporter of iron ore with over 50 per cent of over 200 million tonnes of iron ore mined domestically destined for China, Japan, South Korea among other countries. Indian iron ore exports for the April-December 2010 period were down 17 per cent compared to the previous year. Iron ore exporters feel that the move to hike duty would turn counterproductive resulting in increased prices of the commodity in the domestic market.
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