India, Asia’s third-largest economy is urging to churn out new ways to increase foreign currency inflows in the country and to control the dramatically falling Rupee. India is likely to cut the iron ore export duty to 20% from 30%, which was imposed earlier, to encourage more shipments of material into the country and also to narrow the current account deficit (CAD) prevalent in the country.
With Rupee hitting new lows nearly every day, has raised eyebrows of not only the financial institutions but also of the policy makers of the country. Presently, Rupee stands at 65.5 against the US Dollar, which was yet another lowest record of the Indian currency.With ministry giving only statements and traders with no settlements have made the situation much more grave.
With the decrease in the export duty on Iron ore, the government is trying to get control on CAD, which has majorly impacted falling Indian currency. Earlier this year, PM had said the government was trying to remove constraints over the export of iron ore, after shipments dropped to 18 million tonnes in 2012-2013, from an appreciating amount of 117.4 million tonnes in 2009-2010.
Contrarily, steelmakers like JSW Steel, along with Steel Minister Beni Prasad Verma and Heavy Industries Minister Praful Patel have raised their concerns over decrease in the export duty on Iron ore, stating that it will affect the domestic steel industry to a large extent. Moreover, it will impact the production as well as availability of steel to the domestic manufacturing industries, especially the automobile industry, which is undergoing a severe recessionary phase.
However, industry experts believe that cutting down the duty on iron ore will not help increase exports in a significant way. Government should sort out a way to bring down the differential freight charge, which had been levied on exports of iron ore.