On Thursday, the Congress party made allegations against the Modi government claiming irregularities in iron ore pellet export. The party alleged that an iron ore scam worth Rs 40,000 crore took place in the six years during the rule of Modi government.
In a press conference addressed by Pawan Khera, the Congress party alleged that in 2014, the Narendra Modi government changed the export duty on iron ore pellets to zero, which was 30% earlier. He said that while the govt retained the export duty 30% on iron ore, they reduced it to zero on exports of Iron Ore Pellets. He also added that the govt allowed KIOCL (Kudremukh Iron Company Limited) to export iron ore to China, Taiwan, South Korea and Japan.
The Congress spokesperson added that earlier only KIOCL was allowed to export iron ore, but after the change in policy, several private companies started exporting ore in the form of pellets, and didn’t pay any export duty on it. The Congress spokesperson claimed that the private companies didn’t have any permission to export iron ore, and they not only exported pellets, but also evaded tax on it. He said that the quantum of the scam was Rs 40,000 crore, and the companies evaded Rs 12,000 crore in taxes.
But these claims by the Congress party are false and baseless. According to govt sources, these are unsubstantiated claims which reflect the party’s “sole motive to kill India’s exports and hurt our domestic industry.”
First, the Congress party alleged that export duty on Iron ore pellet was removed in 2014, but that is completely false, because it was the UPA government which had started the zero duty on pellets in 2011 itself. In the budget speech for 2011-12, the finance minister Pranab Mukherjee had announced, “Full exemption from export duty is being provided to iron ore pellets to encourage the value addition process for fines.” In the same budget, export duty for all other types of iron ore were changed to 20 per cent ad valorem.
The second claim that only Kudremukh Iron Ore Company Limited is allowed to export iron ore pellets is also totally wrong. Ministry of Law and Justice has not made any such rule as claimed by the Congress party. The fact is, Government of India has only referred the matter to Law and Justice for their opinion. The matter is further under consideration for the views of competent authority. No decision has been taken yet on barring other companies from exporting iron ore pallets.
The biggest lie by the Congress party on the matter was that KIOCL was the only company exporting iron ore pellets before 2014. Export of iron ore pellets were never an exclusive right of KIOCL, and it was always free, after the sector was opened up in 1992 during economic linearisation. There was, however, a restriction that only KIOCL could export pellets produced by it. This means, while others were allowed to export pellets freely, it was not the case for KIOCL. In fact, the company didn’t even export any pellet between August 2011 and August 2014, during the UPA rule.
In 2014, the Modi government changed the rule for KIOCL to export pellets manufactured by it. As per the amended rule, KIOCL was allowed to export its own manufactured iron ore pellets either by itself or through any entity authorized by them for the purpose. It didn’t mention anything about allowing private entities, which were already allowed. As can be seen in the notification, the earlier export policy for KIOCL was STE (State Trading Enterprise), which was changed to Free. This means, earlier KIOCL was allowed to export pellets only through PSUs, but now they are allowed to authorise any entity for this purpose. This rule is only about pellet made by KIOCL, this does not talk about any private company exporting pellets as the Congress is alleging.
The data for the Iron Ore Pellet from 2004 to 2014 exposes the lies of Congress party. India exported 2.09 lakh MT of Iron Ore Pellet in 2011-12, 20 MT in the next year, and 17.13 lakh MT in 2013-14, in the years when KIOCL didn’t export any pellet.
This shows other entities were exporting pellets during UPA govt, and it was not something that started after Modi govt came to power. A total of 1.4 lakh crore tonnes of Iron-Ore Pellets were exported during Congress-led UPA Government, and from 2011 onwards, the export duty on the same was zero.
In fact, it is intriguing that in the same year when export duty on iron ore pellet was made zero, state owned KIOCL stopped export pellets. This means, only other entities benefited from the zero export duty regime during the UPA govt, not KICO. The company restarted export pellets in August 2014, 3 months after Modi govt came to power.
Therefore, the allegations made by the Congress party claiming a scam on iron ore pellets are completely baseless. Zero export duty on pellets were started during UPA govt, and entities other than KIOCL were exporting pellets during the Congress-led UPA govt.