PTI reported that opposing the proposal to hike royalty on iron ore to 15% mining industry has said any increase would impact small units and hit revenue to states due to unviable and resultant less production.

Miners' body Federation of Indian Mineral Industries said that the royalty should rather be lowered to 7.5% from 10% at present to induce growth. A study group appointed by the Mines Ministry has circulated its recommendations, including hike in royalty on iron ore to 15% to various stakeholders.

FIMI in a 'note of dissent' has said that hiking royalty rate to 15% would go in vain as net revenue to states would come down due to unviable and resultant less production.

FIMI said that “Any increase in royalty will result in phenomenal rise in prices. This will result in marginal grade mines going out of production. It will chock investments in new technologies and hinder development of low grade mineral resources. Lessees would be prompted to mine higher grades, leaving low grade minerals unmined. This would lower the production and eventually, the net revenue of the state is likely to be affected.”

FIMI said that "There is no linear relationship of hiking royalties and getting higher revenues. The draft report of the study group has considered enhancing royalty rates as the only measures to increase revenue. Any increase in royalty rate will further deteriorate the situation. Rather it should be reduced to 7.5% to induce growth."

Sources said that the study group, constituted in 2011 under the chairmanship of an additional secretary in Mines Ministry, has suggested the hike in its second draft report which would be finalized later. It had made the same recommendation in the first report which was circulated among the stakeholders in May last year.