New Delhi: Industry body Assocham on Wednesday urged the government to remove the 2.5 percent import duty on iron ore lumps, fines and pellets to boost supply of these raw materials to the domestic steel industry.

There is a dearth in supply of raw materials and this has severely affected the steel industry, with most plants running well below full capacity utilisation, it said in a statement.

"Steel industry continues to struggle for availability of raw material and explore (alternative) import route to source it," Assocham Secretary General D S Rawat wrote in a communication to Finance Minister Pranab Mukherjee.

The 2.5 percent import duty on iron ore adds to the disadvantages of the steel industry as the import route is already considerably expensive, the chamber said.

"Levying it to discourage imports is largely an anomaly in the duty structure," he added.