Business Standard

New Delhi, Jun 14: The government on Friday raised the export duty on iron ore and long steel products used in construction in another attempt to cool prices, rewarded flat steel producers with duty-free exports after they promised to hold prices and imposed fresh excise duty on large cars and sports utility vehicles to dissuade conspicuous expenditure.

In addition to the excise duty of 24 per cent, passenger vehicles with engine capacity of 1,500-1,999 cc will now pay an additional duty of Rs 15,000 and those with capacity of over 2,000 cc will pay Rs 20,000.

Industry experts said this will affect around 45 per cent of the 1.5 million a year car market. While it may leave market leaders and small-car makers Maruti Suzuki and Hyundai largely untouched, others like Tata Motors, Mahindra & Mahindra, General Motors and Honda will feel the impact.

"All our other models will be impacted, except the City," said a Honda Siel Cars executive. Added General Motors India Director and Vice-President P Balendran: "This will only adversely affect the sale of large vehicles in the coming months."

Export duty of Rs 300 per tonne was charged on ore with iron content of more than 62 per cent, while the duty on lesser ore was Rs 50 per tonne. All iron ore exports will now have to pay an ad valorem duty of 15 per cent from today.

While steel makers said this will rein in iron ore prices in the country, exporters said they would lose overseas markets to rivals from other countries, especially China. However, Rana Som, chairman and managing director of National Mineral Development Corporation, said the company would pass the extra duty on to buyers in Japan and South Korea when negotiations come up.

The export duty on long products (rods, angles, sections and wire) has been increased from 10 per cent to 15 per cent to improve their availability within the country. The prices of such products have gone up 50 to 60 per cent in the last one year.