NEW DELHI: The mines ministry has recommended scrapping of export duty on iron ore to bolster miners' revenues amid weakening prices and competition from overseas exporters. The recommendation to the finance ministry follows representations from the iron ore industry, which has been hit hard by slackening demand for ore and a fall in its price in the local and international markets.
Asenior official said the ministries of mines and steel have asked the finance ministry to withdraw the 10% export duty on iron ore. The industry has stated that high level of taxation along with factors like fierce competition from international companies, low global and international demand and declining commodity prices have hit iron ore industry in the state. Last week, trade associations in Goa urged Prime Minister Narendra Modi to withdraw export duty on low-grade iron ore (Fe content below 58%), citing similar reasons. Goa mainly produces low-grade iron ore that is uneconomical for domestic steel mills.
"The industry has to contend with an extremely high percentage of taxes to the tune of over 40% for low-grade iron ore. Most of the taxes were levied or increased during the past years when commodity prices were booming. These taxes are no longer sustainable in the current situation of low prices, which do not support such level of taxation," said Goa Mineral Ore Exporters Association in its letter.
Iron ore producers in Goa are struggling to resume operations and exports of low-grade iron ore as commodity prices in general, and that of iron ore in particular, have crashed, according to the association. Prices of lowgrade iron ore have reduced to a fifth in the last four years.