India: Budget 2020 Dashes Hopes Of Mining Sector With No Reforms Or Duty Cuts

The Budget for 2020-21 has dealt a body blow to the expectations of the mining sector. The sector is almost untouched with no reforms or duty cuts announced.

“The Budget has failed to provide any relief to the mining sector. None of our concerns raised in the run up to the Budget have been addressed”, said RK Sharma, secretary general at Federation of Indian Mineral Industries (Fimi).

Ahead of the Budget for 2020-21, Fimi had sought waiver of the steep duty of 30 per cent on exports of baser grade iron ore up to 62 per cent Fe. In its pre-Budget memorandum submitted to the Union finance ministry, Fimi held that the inventory of iron ore at mines heads had climbed to 162.85 million tonnes (as on March 31, 2019).

A preponderance of this accumulated ore is in Odisha and Jharkhand. Most of the iron ore comprises Fe grade between 58 and 62 per cent, the exports of which still attract 30 per cent duty while duty has been exempted for iron ore up to 58 per cent Fe grade.

Fimi had also pitched for exemption of the existing 15 per cent duty on exports of non-metallurgical grade bauxite. India has ample availability of inferior grade bauxite- the production of the mineral ore trumps the domestic demand. Low grade bauxite is mostly mined in Gujarat and Maharashtra.

Besides effective utilization and conservation of the mineral resource, exports of low grade bauxite have helped the country in amassing foreign exchange. But due to levy of 15 per cent export tax, India’s low grade bauxite have become unviable for the producers in international trade, leading to shrinking volumes in outbound shipments.