October 12, 2008

India raises rail freight for iron ore – Report

India has raised rail freight for iron ore, citing strong demand for wagons but analysts said the move would add to inflation pressures the government is trying to contain.

Mr VN Mathur member traffic of railway board said that "There has been a very large spurt in demand for the movement of iron ore for domestic consumption and export. The rate increase is about 5.6% to 5.8% of transportation cost of iron ore."

It may be noted that Indian Railways has increased the surcharge on iron ore transported to ports for export to 100% from 60% and cut the levy for domestic consumption to 30% from 60%.

India's annual inflation rate hit a 14 month high of 16.68% in mid March 2008, mainly due to a spike in world prices of food, fuel and metals.

Mr Mathur said that the rise in freight rates for iron ore would contribute only a tiny part of the cost of steel products. He added that "It is not going to have an impact on inflation."