Clarification on Iron Ore Exports;

Duty free Iron Ore Pellet exports ongoing even before 2014;

Export policy restriction put in 1998 only for KIOCL

On the issue of Iron Ore exports, the Department of Commerce, Ministry of Commerce & Industry would like to place on record the following facts:

Export policy restriction put in 1998 only for KIOCL: On 21.01.1998, vide Notification, a specific entry was added in the export policy regarding “Iron Ore pellets manufactured by Kudremukh Iron Ore Company Limited (KIOCL) out of concentrates produced by it”. Thus, the export policy was regard to only Iron Ore pellets manufactured by KIOCL, which was 'canalized' through KIOCL, a CPSU under Ministry of Steel.

No change in policy for Iron Ore Pellets not manufactured by KIOCL: Subsequently, vide its Notification dated 26.09.2014 the export policy of Iron Ore pellets manufactured by Kudremukh Iron Ore Company Limited was amended to ‘Free’ from 'canalised'. Further, in the notification a policy condition was also added that the export of Iron Ore pellets manufactured by KIOCL is to be done by KIOCL Limited, Bangalore or any entity authorised by KIOCL Limited, Bangalore. However, there has been no amendment to the export policy of Iron Ore Pellets not manufactured by KIOCL.

Export duty on Pellets made Nil in 2011: To promote the export of Iron Ore pellets as a value added product, then Finance Minister Shri Pranab Mukherjee, had reduced export duty to ‘nil’ during the 2011-12 budget announcing in his budget speech"Iron ore is also exported in a value-added, pelletized form. Full exemption from export duty is being provided to Iron Ore pellets to encourage the value addition process for fines."

Iron Ore Pellet Export happening prior to even 2014: As per the Export Policy, items not mentioned specifically in the export schedule are “free” for exports. As per export data, Iron Ore Pellets were taking place even prior to change in export duty in 2011-12. The iron ore pellet export data in the ten years before the 2014 notification is given in the annexure and is available in public domain. Thus, the linkage to changes in 2014 notification is misleading and is not backed by data.

Legal position still under consideration: The legal opinion from Deputy Legal Advisor, Department of Legal Affairs has not been endorsed by the senior officials of the Department and cannot be taken as the official legal view on this matter. The matter for final legal position is under consideration. 

Annexure: Export data of Iron Ore Pellets

S.No	Year	Quantity (in MT)
1.	2004-05	53,32,600
2.	2005-06	35,47,560
3.	2006-07	4,32,520
4.	2007-08	23,58,490
5.	2008-09	9,09,080
6.	2009-10	2,86,740
7.	2010-11	86,620
8.	2011-12	2,09,670
9.	2012-13	20
10.	2013-14	17,12,97
	Total	1,48,76,270

 

Export policy restriction limited to KIOCL pellets; 2014 amendment freed KIOCL exports while non-KIOCL pellets remained unaffected, legal position pending. The export restriction introduced in 1998 applied only to Iron Ore pellets manufactured by KIOCL, which were canalized through that entity; a later amendment made that KIOCL-specific entry free for export while requiring exports to be effected by KIOCL or its authorised entities. No change was made for pellets not manufactured by KIOCL. Export duty on pellets was set nil to promote value addition, and historical export data show pellet exports occurred prior to the 2014 notification. A Deputy Legal Advisor's opinion is not endorsed and the final legal position is under consideration.