Steel industry hails freight rate cut

New Delhi: Railway Minister Lalu Prasad Yadav on Monday announced a 5 per cent cut in freight transportation rates for diesel, petrol and a 6 per cent reduction in all minerals, including iron ore and limestone.

On the demand of mineral-based industries like steel and cement, during the presentation of the Rail Budget, Lalu said freight rates for all minerals including iron ore and limestone will be charged at Class 160 in place of 170, thereby reducing the freight rates for these commodities by about 6 per cent.

Welcoming the cut in freight rates, especially on iron ore, in the Railway Budget 2007-08, the steel industry on Monday said they would pass on the benefit of the reduction to consumers.

"We welcome the move and congratulate the Railway Minister for a growth oriented budget. The move would directly benefit the consumers as well as the industry," Jindal Stainless Ltd Director N C Mathur told PTI.

He said the industry would immediately pass on the benefit from cut in freight rates to the consumers.

Essar Steel Director J Mehra welcomed slashing of freight rates and described the budget as a shift from passenger related issues to economy related issues.

"Basic freight rate on iron ore would support our top-line," he said, adding that the freight rate cut would reduce iron ore costs by Rs 40 per tonne.

Describing the Rail budget as growth-oriented and anti-inflationary, SAIL Chairman S K Roongta said impact of freight reduction and railway fare concession on the company is likely to be around Rs 70 crore annually.

The Minister's announcement that Railways will cooperate with steel sector's expansion plan "is a welcome statement. Growth plans of steel industries will need substantial improvement in railway infrastructure... which will get strength from the statement of the Railway Minister," he said.

The budget would provide impetus to the Indian economy, which is experiencing exponential growth, Jindal Steel and Power Executive Vice Chairman and Managing Director Naveen Jindal said.

"We are happy that the Railway Minister has focused on increasing the share in transportation of steel by 2011-12. Also, the reduction in freight rates for minerals will have a positive impact on the steel industry over all," he said.