Media reports suggest that in a strategic move to strengthen India’s steel industry, the Indian Steel Association has called for the implementation of export taxes on low-grade iron ore and pellets. This proposal, presented in a letter to the federal Ministry of Steel on July 17, aims to curb exports and ensure that the burgeoning domestic steel sector has access to adequate supplies. With India striving to double its steel output to 300 million metric tons annually by 2030, the ISA's initiative is seen as a crucial step in achieving this ambitious target.
The ISA, which represents major steel producers has recommended a 20% export tax on iron ore containing less than 58% iron and a 10% tax on all iron ore pellets. Currently, India does not impose any taxes on the export of low-grade iron ore, while high-grade ore is subject to a 30% duty. This inconsistency has led to concerns that some companies are blending high and low-quality ores for export, exacerbating domestic shortages and undermining local steel production efforts.
India is the world's fourth-largest producer of iron ore, and the ISA's proposal comes at a time when the country faces significant challenges in ensuring a stable supply for its steel manufacturers. According to projections, iron ore shortages in India could escalate from the current 55 million metric tons to over 100 million metric tons per year in the near future. The ISA's call for export taxes is aimed at preventing this potential crisis and securing the necessary resources for domestic steel production.
China remains the primary destination for Indian iron ore exports, accounting for over 90% of the country's shipments. This heavy reliance on a single market raises concerns about the sustainability of India’s iron ore exports. By implementing export taxes, the ISA believes that more iron ore will remain available for local steel producers, thus supporting the government's broader economic and infrastructure development goals.
In addition to advocating for export taxes, the ISA is also pushing for expedited iron ore lease auctions and increased production from state-owned entities. These measures are intended to enhance domestic production capabilities and reduce dependency on exports, ensuring that local steel manufacturers have the resources they need to thrive in a competitive global market.
Interestingly, this proposal follows the removal of previous export duties in November 2022, which included a 50% tax on low-grade iron ore and a 45% duty on pellets. Earlier this year, the steel ministry declined a similar proposal from smaller steel producers, citing insufficient evidence that exports were adversely affecting domestic producers. This context makes the ISA's current push for export taxes particularly significant, as it reflects an evolving landscape in India's steel industry.
