Higher duties: China threatens boycott of Indian iron oreSaibal...

Higher duties: China threatens boycott of Indian iron ore
Saibal Dasgupta
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BEIJING: China has threatened to boycott Indian iron ore, the first boycott threat against Indian goods in several years, as a protest against the recent decision of finance minister P Chidambaram to raise the duty on iron ore exports. Indian embassy in Beijing have began talks with Chinese trade officials to contain what could be a emerging storm in the Sino-Indian relationship.

The Chinese steel industry said it would obtain iron ore from other sources like Australia and Brazil to meet the shortfall that would be caused by the boycott move. The trade on this commodity has already come to a halt with local buyers asking several China-bound ships to return to India. The duty hike of made Indian iron ore more expensive as compared to the commodity shipped from Australia and Brazil the industry said.

The Chinese threat, if implemented, would mean a crash in total Indian exports to China as iron ore accounts for 50% of the total export basket. China is the biggest destination for Indian iron ore while India is the third largest supplier for the Chinese steel industry.

Yan Bangsong, deputy director of China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters (CCCMC), said that Chinese steel makers were being forced to pay an additional $500 million on existing deals as Indian suppliers were demanding a higher price to cover the duty hike. The Indian government has hiked the export duty by Rs 300 a tonne.

Sources said Chidamba-ram's move was to aimed to meet the rising demand for iron ore within the country as well as discourage the use of Indian iron ore to feed the runaway growth being seen in the Chinese steel industry, which directly competes with Indian steel.