India Scraps Export Duty on Iron Ore & Steel Products
In May 2022, the Indian government levied a tax of 50% on the export tax of iron to constrain inflation. The Indian government has reversed its previous orders and scraped off the existing taxes for iron ore with an iron content of below 58%. Not only from iron ore, but the Indian government has also scraped off taxes from certain steel commodities on the same day decision.
Why Did the Government Scrap Off Iron Ore Export Taxes?
There has been a flat alleviation of export taxes over iron ore, except pyrites with an iron content of 30% to 50%. With the rise in export taxes the last May, the iron ore export of India nearly became nil. It posed a severe commercial threat to India’s international trade profile. To perverse the situation, the government has decided to lower the tax as an incentive to promote the export of iron ore. Another reason for the falling export of iron ore is China’s reduced demand for iron. China has always been an integral importer of India’s iron ore. With less demand from the country, the exports are touching the grounds.
In India, the major steel factories consume high-grade iron as their raw material. As a result, the leftover iron ore reserved that yields relatively low-grade iron is available for export. This is why the government lowered low-grade iron ore taxes to ease the export process.
Reducing Steel Export Taxes
Another reason for India’s poor export performance is the high shipment charges for steel products. India was one of the largest exporters of fine steel products. After April 2022, the export severely fell apart. It is due to the higher export taxes levied on intermediate steel products. The reduced global demand and the non-favorable export tax policy have contributed to the export rates of steel products falling to their lowest in the last 5 years.
Scraping off the export taxes is a positive attempt by the Indian government to boost the country’s export economy by refueling iron ore and steel export. With a lowered export tax, the business houses will be reinforced to resume their export duties. The global demand for Indian iron ore and steel products has significantly fallen. In such circumstances, with the few export orders that India still holds, lowering the export duty was a much-needed step. In the first few months of the fiscal year 2022.
For more information, please refer to the Government link Here