The government has scrapped a 5 per cent duty on export of iron ore pellets in order to make overseas shipments competitive amid a sharp fall in international prices of the steelmaking raw material.
"This would improve capacity utilisation of pellet plants and give necessary boost to sector," steel and mines minister Narendra Singh Tomar tweeted.
The government had in 2014 slapped a 5 per cent export duty on iron ore pellets, which are value-added products of leftover material or low grade iron ore and are used in steel-making.
In a notification, the Central Board of Excise and Customs (CBEC) said: "... The Central Government being satisfied that it is necessary in public interest so to do, hereby makes following further amendments in the notification of the Government of India in Ministry of Finance (Department of Revenue) No. 27/2011- Customs, dated the 1st March, 2011."
''In the Table, against serial number 23 (Iron Ore Pellets), in column (4), for the entry "5 per cent", the entry "Nil" shall be substituted,'' the notification added.
Iron ore pellet makers as well as some miners had urged the government to reduce the export duty on iron ore as it would help in making the commodity more competitive.
The market for steel and its related raw material is undergoing a tough time on account of subdued demand and high production, which is adversely impacting the prices.
Besides, fall in demand in China, the worlds' biggest metal consumer, is leading to the country dumping excess steel and other finished products in consuming countries, including India, a move that has impacted the top- and bottom-line of the mining and steel companies.
The development comes after mining and related industries approached the government, last year, to provide exemption to them on the lines of those provided to state-run mines NMDC.
Last year in October, the government reduced the export duty on export of iron by MMTC (only NMDC origin) to Japan and South Korea under the Long Term Agreement (LTA), from 30 per cent to 10 per cent, up to and inclusive of 31 March 2018.