Ministry planning to hike iron ore export tax
September 2, 2008 – 1:36 pmSteel ministry is considering raising the tax on exports of iron ore, a key demand of steel firms facing falling margins, to increase local supplies and help lower prices. This measure even helps central government to reduce the inflation. Leading steel makers have asked for the tax to be lifted to 35 percent from 15 percent. Steel players in India are facing hardships with increasing input costs and the government has leaned on them for months not to raise prices.
After meeting officials of steel firms Ram Vilas Paswan said, “One issue being considered is raising the export tax on iron ore”.
Steel analysts expect it is likely that the government would hike the export tax on iron ore by 25 percent. They also say, “Increase in export tax is very much possible because the government is against companies exporting high-quality iron ore”.
Miners in India exported about 93 million tonnes of iron ore in the fiscal year ending March 2007. Local miners say exports could halve in the year to March 2009 as the existing tax makes rival suppliers attractive and India will loose edge in international markets.
Government is cautious on prices and sources say a short-term approach on pricing raw materials and steel has the potential to slow down growth. In India, steel industry is in critical stage as people like to import due to low international prices. Its still unclear increasing export tax on iron ore is the only solution.