The central government has increased the export duty on iron ore lumps by 5 percentage points to 10 per cent and on iron ore fines to 5 per cent from nil, according to a finance ministry notification.
According to experts, the decision would have a serious impact on the mining sector.
"This decision has come at a wrong time when the exports were picking up and showing signs of recovery," said R K Sharma, secretary general of the Federation of Indian Minerals Industries (FIMI).
"This will have cascading effect on the steel industry. Finance ministry should have waited for some time before increasing the export duty and should have allowed the steel industry to recover from the global economic meltdown," he added.
India currently is the third largest exporter of iron ore in the world after Australia and Brazil.
FIMI had been clamouring for the removal of export duty on iron ore lumps, stating that the tax barrier along with high railway freight had out-priced the ore in the global market.