In a letter to the Reserve Bank’s foreign exchange department, Welspun Maxsteel has sought to highlight imports of sponge iron from Iran, saying they are being routed through the UAE to avoid transaction settlements in dollars. Deals in the US currency have become difficult for Iran after the US and the EU imposed sanctions on it over its nuclear programme.
“December 12 onwards, much cheaper and inferior quality gas-based DRI (direct reduced iron) is being dumped aggressively from Iran which, as per our information, is exported to India by showing the certificate of origin as UAE, instead of Iran (where its was produced)…” Welspun director Prakash Tatia said in the letter.
Sponge iron, also called direct reduced iron, accounts for 35% of the alloy manufactured in the country. The direct reduction route uses coal or natural gas to make a basic grade of steel. Its advantages, though, are that it doesn’t require coking coal, which isn’t easily available in India.
Tatia, who is also vice-chairman of the Sponge Iron Manufacturers Association (Sima), alleged that about 0.45mt of DRI were imported from Iran via Dubai last fiscal. This year, there’s been a surge in such cargo arriving at Mumbai’s JNPT port and port of Magdala in Gujarat, he added.
