India looked to boost its competitiveness on Saturday as it scrapped export taxes on intermediate steel products and iron ore.
A 50% tax on exports of iron-ore lumps will be reversed just a few months after being put into place in May. A tax rise for iron ore concentrates will also be reduced back from 50% to 30%.
The government also removed a 15% export tax on some intermediate steel products, such as bars and rods, that it had also imposed in May.
The policy move comes into place after months of complaints from miners and steel makers about loss of foreign sales opportunities.
The additional taxation imposed in May was intended to boost domestic supply of iron ore, a raw ingredient for making steel, and thereby hold down inflation.
India exported less than half as much steel in the seven months to October as it did a year earlier, according to government data.
Major steel makers have urged the government to unwind the additional export taxation, saying it added to their problem of weakening international demand.
Weak China Demand
Despite the latest tax reductions, a top miners’ organisation remained doubtful about the prospect of exports reviving.
The “Chinese market is not very buoyant now. Let us see how much we are able to export,” R.K. Sharma, secretary-general of the Federation of Indian Mineral Industries said.
“Once you disturb the trade, to recover is very difficult.”
Earlier this month, Sharma said India’s iron ore exports had dropped to “nearly zero” in October due to the higher export taxes and was further expected to languish due to lower demand from China’s weak economy.
- Reuters, with additional editing from Alfie Habershon