India's steel ministry has stated that reducing the country's iron ore export tax from the current 30 percent might negatively affect the raw material security of the domestic steel industry and, contrary to the government's view, would lead to a significant increase in the country's current account deficit, according to a news report by local daily Indian Express.
Indian Prime Minister Manmohan Singh had recently suggested that a reduction in export duty on iron ore would help the government earn foreign exchange to control the expanding current account deficit. Additionally, the commerce ministry and the mining ministry asked for a reduction of the iron ore export duty.
According to the new report, the steel ministry explained that the continuation of this 30 percent duty is crucial as steel companies face high capital costs, higher costs in infrastructure constraints and sourcing coking coal from abroad. The ministry emphasized that, if the country's steel producers fail to meet domestic demand, their customers will be compelled to import.
