China has decided to reduce the import of iron ore from India, protesting New Delhi's decision to levy a tariff of Rs 300 per tonne from March 1.
BEIJING: China has decided to reduce the import of iron ore from India, protesting New Delhi's decision to levy a tariff of Rs 300 per tonne from March 1.
China's imports of iron ore from India will drop following the levy of export duties, Liu Zhengang, a senior manager with China Minmetals Corporation, the country's
largest minerals trading company, said here.
"The export duties make Indian iron ore less competitive in price and are forcing buyers to turn to other countries," Liu was quoted as saying by the official Xinhua news agency.
He said the attractions of India iron ore are their comparatively low price and India's proximity to China, which secured faster capital circulation.
However, the situation changed after India imposed a tariff of Rs 300rupees ($US7) per tonne of iron ore exported from March 1.
China, the world's biggest steel maker and consumer is also the biggest iron ore consumer and importer.
Sinosteel Corporation, China's second largest iron ore importer, announced last week that it would call a halt to imports from India, the first company to take action against
the duties.
As the world's biggest producer and consumer of steel, China imported a record 325 million tonnes of iron ore last year, 23 per cent of which came from India.
Iron ore is the top item of India's exports to China and contributes to nearly 55 per cent of the total Indian exports to China.
India's decision has also been criticised by domestic players trading in iron ore.
"Such an imposition of taxes without a buffer period is a scary thing both for the local and international business community as it jeopardises all long-term plans and
commitments," Director of Txyco Ltd Roy Sagnik told PTI here.
"Credibility of India as well as Indian business community will suffer from such sudden taxes," Sagnik, who imports substantial amounts of iron ore from India, said.
He pointed out that in China, the government reduced export related Value Added Tax (VAT) refunds, but there was a substantial grace period.
"Any sudden and overnight action by any government would repel trust from business community both locally and internationally," Sagnik said.
India's move has shocked China's steel industry, prompting more than 100 iron ore buyers to convene a meeting last Tuesday to discuss their response to the duties, 'China
Daily' reported last week.
They agreed to try and reach a more reasonable scheme with the Indian government before the Parliament formally approved the duties in the next two weeks, the International Financial News reported.
Indian iron ore will become much less competitive in prices, forcing Chinese buyers turn to Brazil and Australia, according to a report by the China International Capital
Corporation Limited (CICC).
China imported 74 million tonnes of iron ore from India last year, about a fifth of its total imports, one report said.
The CICC report says the policy will have a limited effect on China's steel industry due to rising steel prices.
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