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Indian Trade Body Calls For Rise In Iron Export Tax

by Mary Swire, Tax-News.com, Hong Kong

02 March 2011


Leading Indian industry body the Associated Chambers of Commerce and Industry of India (ASSOCHAM) has called for curbs on iron ore exports by increasing export tax on fines and lumps (fines are less than 6mm in size and lumps are 10mm to 40mm) from 5% and 15% to 30%.

According to ASSOCHAM, to save duty, manufacturers are currently converting lumps into fines to save duty before exporting the the products to China.

The industry body also suspects that the current system of export duties is "promoting illegal mining in the country with profits going to mine owners who have little social and environmental concerns."

"If there is restriction on exports, all fines will be consumed by the expanding steel industry”, ASSOCHAM says.

India produced 215m tonnes of iron ore in 2008-09 and exported 106m tonnes of it. Of the 129m tonnes of fines produced, 92m tonnes were exported. In the case of lumps, the production was 86m tones, while exports totalled 14m tonnes.

ASSOCHAM wants the government to ban iron ore exports in a phased manner with a complete restriction by 2015-16. Steel Minister Beni Prasad Verma is in agreement with the trade body, saying last week that there should be more control on exports. Commentators, however, believe that the government is unlikely to approve a total ban, instead preferring better regulation and incentives for increased domestic use of iron ore.

TAGS: tax | India | mining | export duty | tax rates | trade

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