India 09/10 iron ore exports seen falling this fiscal

India's iron ore exports for the year ending March 31 are likely to fall from the previous year as hikes in export duty and freight cost slow deals down, the head of the Federation of Indian Mineral Industries (FIMI) said on Friday.

The exports are expected to be between 90 and 100 million tonnes compared with the previous year's 106 million tonnes, said Siddharth Rungta, president of FIMI.

"It is because of uncompetitiveness on account of (poor) logistics and uncertainty over export duties," he told Reuters.

India is the world's third largest exporter of iron ore with most of its exports landing in China that houses the largest steel industry in the world.

Rungta said though exports had been growing significantly till last year, an export duty hike at the end of December and talks of further hikes since then have taken a toll on shipments.

"With such kind of increase, we cannot plan our movements, our shipments. We can't have a contract," Rungta, who also owns mines and exports iron ore, said.

Indian government raised the duty on iron ore lumps to 10 percent from 5 percent earlier and imposed a 5 percent duty on fines at the end of December as demand for the raw material rose and prices surged.

Just before the 2010/11 budget on February 26, the iron ore trade was rife with talks that the duty on exports may be raised again.

Rungta said the duty hike rumours have resurfaced in the past couple of days.

In addition to the export duty, iron ore exporters have been hit this week by a hike of 300 rupees (USD 6.6) a tonne in railway freight.

Latest data from FIMI shows, India's exports in December fell 11 percent to 12.37 million tonnes. In April to December, exports were at 76.54 million tonnes, up 15% from a year ago.