Indian Railways to cut 30% port levy on iron ore for local use

Freight rate for iron ore is set to come down further with the Railways deciding to remove the 30% port congestion surcharge levied on the mineral meant for domestic use. The move is set to benefit steel companies such as Essar Steel, Ispat Industries and Vikram Ispat which do not have captive mines. These companies depend mainly on rail transport for moving raw material to their steel plants. A fortnight ago, the Railways had shifted iron ore from class 180 to 170. The reclassification had resulted in freight cut of ore by 4-5%. However, the port congestion surcharge on iron ore meant for exports would continue to remain at 100%.

The proposed changes follow a series of high-level government meetings over finalising a steel package to contain inflation. Iron ore constitutes an important cost element in the entire process of steel making. With iron ore prices rising 100% in a year and expected to rise further, the Railways’ initiative is expected to reduce cost pressure on the steel sector.