In its 2011-12 budget, India has increased its export duties on iron ore fines and lumps to 20 percent, up from five percent and 15 percent respectively. The country's iron ore exports are expected to be significantly hit by the decision.
"Iron ore attracts an export duty of 15 percent in the case of lumps and five percent in the case of fines. This is a natural resource which needs to be conserved. I propose to enhance the rate of export duty for all types of iron ore and unify it at 20 percent ad valorem," Indian Finance Minister Pranab Mukherjee said in his budget speech. Mukherjee, however, has also withdrawn the export duty on iron ore pellets, in order to encourage exports only after value-addition.
India's iron ore exports have already slumped on the ban by the southwestern state of Karnataka, with sales down 24.8 percent year on year in December to 9.7 million mt. Other states such as Orissa and Chhattisgarh have also asked the federal government for permission to impose export duties.
Looking at the broader picture, country-wise exports declined by 30.62 percent year on year during July-December, 2010 to 36.58 million mt, India's Economic Times has pointed out.
Meanwhile, Indian steel giant Tata Steel's non-executive vice president B. Muthuraman, in an interview on local television channel CNBC-TV18, described the decision as "a good step."