India is considering raising the tax on exports of iron ore, a key demand of steel firms facing falling margins, to increase supplies and help lower prices, the steel minister said on Monday.
Leading steel makers have asked for the tax to be lifted to 35 percent from 15 percent as they try to reduce input costs at a time when the government has leaned on them for months not to raise prices as it fights double-digit inflation.
“One issue is raising the export tax on iron ore. The government is considering it,” Ram Vilas Paswan told reporters after meeting officials of steel firms.
Pawan Burde, a steel analyst with Angel Broking in Mumbai, said it was likely the government would hike the export tax on iron ore, but possibly only to 25 percent.
“That’s very much possible because the government is against companies exporting high-quality iron ore,” Burde said.
India exported about 93 million tonnes of iron ore in the fiscal year ending March 2007, out of which about 75 percent went to China. Local miners say this could halve in the year to March 2009 as the existing tax makes rival suppliers attractive.
Earlier in the day, Paswan told an industry conference the sharp increases in prices of raw materials were a cause of concern and both steel and its raw materials needed to be at “reasonable levels” for sustained growth of the sector.
“A short-term approach on pricing of critical raw materials and steel has the potential to slow down growth,” he said.
Steel Secretary P.K. Rastogi said domestic prices could decline further in September, tracking international markets.
“They are not able to sell their products because people like to import rather than purchase from them, as their prices are high,” Rastogi told reporters
SOURCE: http://malaysia.news.yahoo.com/rtrs/20080901/tbs-india-steel-02c71ef.html
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