Centre scraps export tax on iron ore and steel

Subject :Economy

In news-

India scrapped export taxes on low-grade iron ore and on some intermediate steel products beginning 19 nov 2022, after months of complaints from miners and steel makers about loss of foreign sales opportunities.

Tax imposed-

A notification issued reverses the imposition in May of a 50% tax on exports of iron-ore lumps and fines with less than 58% iron content.
The government also reversed a May increase in export tax on iron ore concentrates other than roasted iron pyrites. That tax returns to 30% from 50%.

Why the tax was imposed-

To boost domestic supply of iron ore, a raw ingredient for making steel,
To hold down inflation.
India exported less than half as much steel in the seven months to October as it did a year earlier.

Consequences of imposing tax-

Earlier this month India’s iron ore exports had dropped to “nearly zero” in October and was further expected to decrease due to lower demand from China’s weak economy.
Indian producers of low-grade ore depend largely on foreign markets, because most major domestic steel producers use high-grade iron ore.

The iron ore is found in following four types:

Magnetite:
- It is the most important and best kind of iron ore.
- It contains about 72% metallic iron in it. It is found in Karnataka, Andhra Pradesh, Rajasthan, Tamil Nadu, Goa and Kerala.
Hematite:
- It contains about 60-70 percent metallic iron in it.
- It is red and brown in colour.
- It is found in Odisha, Jharkhand, Chhattisgarh and Andhra Pradesh. In the western section, Karnataka, Maharashtra and Goa have this kind of ore.
Limonite:
- It contains about 30 to 40 percent metallic iron in it. It is mostly yellow in colour. It is low-grade iron ore.
Siderite:
- It has more impurities.
- It contains about 48 percent metallic iron content in it.
- It is brown in colour.
- It contains a mixture of iron and carbon. It is low-grade iron ore. It is self-fluxing due to the presence of lime.

Reserves and distribution of iron ore

About 95% of total reserves of iron ore are found in the States of Odisha, Jharkhand, Chhattisgarh, Karnataka, Goa, Telangana, Andhra Pradesh, and Tamil Nadu.
India’s leading state that produces iron ore is Odisha. It accounts for more than 55% of the total production followed by Chhattisgarh producing almost 17%, this is followed by Karnataka and Jharkhand producing 14% and 11% respectively.

Export of iron ore from India

India is the fifth largest exporter of iron ore in the world.
About 50 to 60 percent of our total iron ore production to countries like Japan, Korea, European countries, and lately to Gulf countries.
Japan is the biggest buyer of Indian iron ore accounting for about three-fourths of our total exports.
Major ports handling iron ore export are Vishakhapatnam, Paradip, Marmagao, and Mangalore.