Export levy on iron ore may be reduced

Finance minister may announce revised rates today.

The Centre is considering a partial reduction of Rs 300 per tonne export levy announced in the Budget and put into effect from March 1. A decision is expected to be announced shortly.

Sources close to the development said the finance minister might announce the revised rates when he replies to the debate on the Finance Bill, 2007, tomorrow.

However, the amount of the reduction could not be ascertained. A top exporter said the minister may abolish the tax on export of iron ore of all grades. He said the tax on lumpy iron ore, having iron content of more than 65 per cent, might be maintained.

The reduction, if it happens, will be in line with the Hoda Committee recommendations which discouraged export of ores with high iron content on the grounds of scarcity.

Iron ore exporters have been claiming that the levy will hit their bottom lines. They have furnished financial data to establish their claims. The ministry has also asked them to furnish details of production and sales ever since the levy was imposed.

An iron ore exporter said: "We have managed to explain our case to the finance ministry. We are hopeful that the minister will save the industry."

Exporters said the extra burden of tax made Indian iron ore unattractive in the global markets, especially in China which buys huge ore from India.

However, exports to China have gone up in March, according to industry estimates.

Exporters said the surge in demand for Indian ore in China was due to Rio Tinto's force majeure and the recent cyclone in Australia.

Also, many shipments were booked before the announcement of the levy of Rs 300 a tonne, they added.

China imported over 9 million tonnes of ore from India in March against 5.5 million tonnes in February.