In a move that will further hit the revival of the beleaguered Goa mining industry hard, the Centre on Saturday hiked export duties from 30 per cent to 50 per cent for all grades of iron ore via a notification which takes effect on Sunday.
The Finance Ministry notification tinkered export duties for multiple commodities and fixed it at 45 per cent for iron ore pellets.
Export duty on iron ore and concentrates has been raised to 50% on all categories (grades), up from 30% which was hitherto applicable to lumps of grade above 58% Fe content.
For iron ore pellets, a 45% duty has been imposed. Formerly that was no export duty on iron ore pellets.
The move, understood to be aimed at facilitating greater availability of iron ore for the domestic steel industry, meanwhile, is a huge dampener for the iron ore mining industry of Goa which has been looking up to a reboot after nearly a decade of virtual shutdown due to the ban imposed twice by the Supreme Court of India.
Finance Minister Nirmala Sitharaman indicated in a tweet that the duty revision exercise on iron, steel and raw materials was to tame prices.
“We are calibrating customs duty on raw materials and intermediaries for iron and steel to reduce their prices," Sitharaman's tweet read indicating that the move is also aimed at arresting the impact of rising prices of inputs on infrastructure creation when the government is banking on infrastructure-investment to drive a recovery of the economy.
Meanwhile, already reeling under the weight of a virtual shutdown since 2018, Goa's mining industrial houses have mostly been export dependent since their inception in pre-Liberation era.
The hike in export duties will adversely impact their bottom lines and possibly also the ongoing preparations to restart mining operations in the State.
On the flip side, the tinkering of duties is a double bonanza for the domestic steel industry, with duties on import of raw materials such as coking coal and ferronickel have been waived by the Centre hoping it will lower costs and therefore steel prices in the domestic market.
Besides, the duty on import of raw materials used in the plastic industry has also been reduced to lower the cost of domestic manufacturing.
While import duty on naptha has been cut to 1 per cent, from 2.5 per cent, the duty on propylene Oxide has been halved to 2.5 per cent.
The import duty on Polymers of Vinyl Chloride (PVC) has been cut to 7.5 per cent, from 10 per cent, currently.
The alterations in the rates of duties comes into effect from Sunday (May 22), according to the notification.
Iron ore mining industry watchers meanwhile expect the hike in export duty to adversely impact the financial viability of iron ore mining operations in Goa, which has mostly been exports dependent. It will also have an impact on the State's proposal to hold auctions for giving out fresh mining leases as valuations are bound to be hit, they said.
At its peak in 2011-12, over 54 million tonnes of iron ore was exported from Goa, most of it mined from the State and a miniscule portion of it sourced from other States.
Exports dwindled down to near zero, over the next decade with the Supreme Court of India ordering a halt of operations after it found and declared leases illegal in 2012 and 2018.
The export duty hike is also expected to impact the Goa government's plans to permit mining of dumps comprising mostly of iron ore rejects of past operations over decades.
The State government had finalised a policy on iron ore dump mining and a cabinet decision was passed back in December last year.