The government is considering to increase the export duty on iron ore from 15 to 20 per cent to help lower the cost of steel production and ensure availability of the alloy at cheaper rates in the domestic market and enable additional resource mobilisation (ARM) of more than Rs 2,500 crore for the exchequer.

“In a proposal, the finance ministry has suggested that the export duty on iron ore be increased to 20 per cent from the current 15 to ensure availability of the mineral to the steel producers at affordable rates and enable ARM of nearly Rs 2,583 crore,” official sources said. Despite the imposition of export duty, export of the mineral has reportedly not come down, triggering concerns that perhaps the duty needs to be further increased.

The steel ministry has been pitching for increase in the duty, saying that barring the state-run National Mineral Development Corporation, other producers have increased the price of ore lumps by Rs 500 to Rs 1,000 a tonne after the duty was imposed. Iron ore price, which had touched around $200 per tonne in January, is believed to have softened by $10, but steel producers still consider it to be quite high.