1-Sep-2013
Reduction in export duty on iron ore to 20 per cent from the present 30 per cent may not be beneficial to exporters, unless the railway tariff charged on iron ore meant for exports is withdrawn or made on par with domestic tariff rate.
Export duty reduction would hardly benefit them to the extent of Rs 700-900 per tonne, while any reduction in the railway freight could ease the flow of iron ore and allow transportation of higher volumes, according to a survey of miners. It would also reduce the issues related to road transportation.
As it is, increasing diesel prices as a result of depreciating rupee against the dollar has made things difficult for the miners, when they move the ore through lorries.
According to a survey conducted by Delhi-based mining and metal information website, OreTeam, reducing export duty by 50 per cent to even 15 per cent for iron ore fines from the present 30 per cent would only save the exporters a mere Rs 700-900 per tonne.
OreTeam conducted the survey to analyse if the mining and trading lobby was happy with a reduction in export duty or would be happier with a reduction in the railway freight meant for exports. Ultimately, reducing the railway freight will help the production of iron ore to restart quicker and in bigger proportions as more material would be able to move from the mine heads as compared to the same cargoes being transported through trucks.
"The hiking diesel costs can also be mitigated to an extent if railway freight for exports is brought to equilibrium with the domestic freight rates. In this manner a complete solution can be framed for the iron ore and steel industries in one go. Also, discounting railway freight for exports in line with the domestic freight rates, would help the miners and traders save nearly Rs 1,200-1,500 per tonne, almost Rs 500 per tonne more than a reduction on the duty front," OreTeam said.
Reducing export duty may only help some miners, as majority of miners and traders in India will still be using trucks instead of rakes for moving their iron ore, which would cost them a heavier burden. Also, another factor, which the government has to investigate, is that cutting down the export duty would mean the government is cutting down its own revenues and allowing the profits to grow on the miners' front. This wouldn't allow the government or the opposing lobbies to stay content for a longer time.
Many miners in the recent past had issues related to truck or road transportation in the East and were forced to lighten their cargoes as major jams were visible near Paradip and Vizag ports. Similarly, the truckers were commanding the miners with hiked rentals on the back of delays in transportation, hiked fuel costs and heavy vigilance checks on major highways. Many miners were unhappy with the delays in road transportation and had even reached the top authorities of the state to intervene. Reducing railway freight might help such miners and traders and ease such issues, OreTeam said.
OreTeam conducted a survey, which received nearly 56 responses over the last week and on the basis of the responses the respondents also feel that reducing railway freight will have more impact than reducing the export duty.
About 42 miners and 16 traders from across the country responded to the survey and nearly all 16 traders said that reducing railway freight rates will be more beneficial to the industry.
But of the 42 miners who responded, majority (69 Per cent) had the same opinion of railway freight reduction giving them better margins than export duty cut. On the trading front, the support came from nearly 86 per cent of the total 14 respondents.
OreTeam survey did not include any respondents from Karnataka but had few from Goa as iron ore exports from Goa is the lifeline of the state and soon Goa would be back in business.
Source:- business-standard.com
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