BL reported that Cabinet Committee on Prices has asked for details of the impact of imposition of export tax on iron ore on domestic prices from the Ministry of Mines.

According to sources, details of iron ore price movement in the domestic market after the imposition of export tax, quantum of exports post tax, revenues earned by the Government and projections of export trends are among the information sought by the CCP.

The India government had imposed 15% export duty on iron ore on June 13th. Early this week, the Steel Ministry had recommended to the Finance Ministry to raise the export duty to 20% to increase availability in the domestic market as well as to preserve this non renewable natural resource for future use within the country. Sources in the Steel Ministry said that higher availability could help softening domestic iron ore prices which in turn would keep steel prices under control.

Meanwhile, the Federation of Indian Mineral Industries which is the representative association of miners had taken up the issue with the Ministry of Mines, Ministry of Commerce, Ministry of Steel as well as the Ministry of Finance. According to FIMI, the 15% export tax has already taken its toll on the iron ore industry. Mr RK Sharma secretary general of FIMI said that there have been no new contracts from Chinese buyers after the new tax was imposed and consequently, export volumes have come down by more than 25% in August. Mr Sharma said that “There is no shortage of iron ore in the domestic market and high taxes will only lead to stopping of exports. If there are no exports, where will the revenue come from?” he added that all the information has been provided to the Ministry of Mines.

Sources said that there is difference of perception among the ministries over the issue. Sources said that “While the Ministry of Mines and the Ministry of Commerce are of the view that exports should not be restricted by putting in high taxes, the Ministry of Steel is in favour of the tax in order to make more iron ore available in the domestic market, while the Ministry of Finance is looking at the possibility of generating higher revenues.”