RANCHI: Economists, industrialists and government officials from Jharkhand are all praise for the proposal of Union finance minister Pranab Mukherjee to levy a 20 per cent ad valorem duty on all types of outbound shipment of the key steel making raw material from the country.
The decision has earned appreciation from Jharkhand as the state has been one of the worst sufferers of iron export. Former chief minister Madhu Koda and his close aides were able to create an empire worth more than Rs 4,000 crore, a major part of which came allegedly for covertly supporting smuggling of iron ore and illegal mining.
Till now, iron ore attracts an export duty of 15 per cent in the case of lumps (high quality) and five per cent in the case of fines (low grade). India is the world’s third largest iron ore exporter. Around 218 mt of iron ore was produced in 2009-10 and almost half of it was exported.
Sources in state mining department said that during 2006-08 a number of iron ore mine lease holders intentionally crushed high quality ore to convert it into fines and exported it. “Since it has patronage of high profile people, the business flourished. Now when the government has decided to levy a 20 per cent ad valorem duty on all grade it will act as a deterrent,” said a government officer.
The decision is expected to generate additional revenue of around Rs 15,000-20,000 crore and contribution of Jharkhand will not be less than Rs 5,000 crore if export continues at the same rate.
India has around 25 billion tonnes of iron ore reserves scattered mainly across Jharkhand, Orissa, Chhattisgarh and Karnataka. Professor Prabal Sen of XLRI School of Business and Human Resources said the decision is going to help local industries and boost the economy of Jharkhand in particular. It will act as a deterrent for those involved in illegal trade.
Chairman-cum-managing director of Heavy Engineering Corporation, G K Pillai, too, appreciated the decision taken by the finance minister. “The decision to withdraw export duty on iron ore pellets will encourage industrialisation. More industries will come up as the decision encourages exports only after due value-addition,” said Pillai in his initial reaction to the budget.