Hike in iron ore royalty rates to harm domestic steel industry in India: ASSOCHAM

During the budget speech, the Finance Minister had proposed to increase the royalty rate on iron ore from the existing 10% to 15% on ad valorem basis on the sale price of the raw material. The government plans to increase the royalty in the wake of scarcity of the raw material due to mining ban. In an open letter written to the Union Finance Secretary, Mr.D.S.Rawat, General Secretary, ASSOCHAM urged the government to withdraw from any move to increase the royalty rates on iron ore.

 

The trade body points out that India is the highest taxed country among world’s major iron ore producers. The royalty rates in India are already high at 10% when compared with 2% in Brazil, 2.7-7.5% in Australia and 3% in South Africa. ASSOCHAM fears that if the government hikes the royalty rates, the producers may pass it on to steel makers, which in turn will increase the cost of steel production in the country.

 

The law permits government to revise the royalty rates after a gap of three years. The last revision had taken place in 2009.