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India scraps export tax on low-grade iron ore
NEW DELHI: India is scrapping export taxes on low-grade iron ore and on some intermediate steel products after months of complaints from miners and steel makers about loss of foreign sales opportunities.
The move, set out in a notification issued late on Friday, reverses the imposition in May of a 50% tax on exports of iron ore lumps and fines with less than 58% iron content.
The government also reversed a May rise in export tax on iron ore concentrates other than roasted iron pyrites. That tax now returns to 30% from 50%.
The additional taxation imposed in May was intended to boost domestic supply of iron ore, a raw ingredient for making steel, and thereby hold down inflation.
India exported less than half as much steel in the seven months to October as it did a year earlier, according to government data seen by Reuters.
Major steel makers have urged the government to unwind the additional export taxation, saying it added to their problem of weakening international demand.
Despite the latest tax reductions, a top miners’ organisation remained doubtful about the prospect of exports reviving.
The “Chinese market is not very buoyant now. Let us see how much we are able to export,” R.K. Sharma, secretary-general of the Federation of Indian Mineral Industries, told Reuters.
“Once you disturb the trade, to recover is very difficult.”
Earlier this month, Sharma said India’s iron ore exports had dropped to “nearly zero” in October due to the higher export taxes and was further expected to languish due to lower demand from China’s weak economy.
Indian producers of low-grade ore depend largely on foreign markets, because most major domestic steel producers use highgrade iron ore.
In Friday’s notification, the government also removed a 15% export tax on some intermediate steel products, such as bars and rods, that it had also imposed in May.
Last week, JSW Steel Ltd, the country’s largest steelmaker by capacity, told Reuters it expected its exports in the financial year to March 2023 to fall to their lowest level in more than five years because of reduced global demand and the additional taxation.
Joint managing director Seshagiri Rao M.V.S said on Saturday removal of the extra levies would boost sentiment in the industry.