India’s duty on iron ore exports is one of its most controversial: the country currently levies a heavy 30 percent duty on the mineral. The tax has been having an especially adverse effect on exporters. An estimated 12 million tons of low-grade iron ore has been sitting at various Indian ports for several months, with buyers unwilling to pay the high export duties.
Once the world’s third largest exporter of iron ore, India’s output of the mineral has been in drastic decline since 2010, when the government increased export duties and began targeting illegal mining operations. Supply to China, India’s largest export market for iron ore, fell to US$61.30 a ton this week – the lowest amount since May 2009. Consequently, local experts expect the duty on iron ore exports to be scrapped at the upcoming budget session.
The export duty on bauxite was raised from 10 percent to 20 percent in 2014. The hike had a big impact on neighboring China, who in 2013 bought up 90 percent of India’s exports of the mineral.
The rise in bauxite’s export duty was intended to boost domestic availability and consumption of the mineral. However, according to a research report published by Citigroup, supply of bauxite will not be sufficient to satisfy global demand this year. As one of the world’s top producers of bauxite, India’s export duty on the mineral will be particularly important for countries heavily reliant on it, such as China.
Exporters should be fully versed in India’s export duty law, which is contained in the Customs Tariff Act and is governed by the Central Board of Excise and Customs (CBEC). Exports fall under Schedule 2 of the Act, and the Indian government has full discretionary power to either reduce or abolish existing export duties during its annual budget sessions.
Under current regulations, most goods can be organized for export by simply paying its export duty, where applicable, and without obtaining a license. It is only if items are listed in Schedule 2 of the Indian Trade Classification (ITC) Harmonized System (HS) that a company will either need to obtain the relevant license, or be unable to export the product at all.
Products listed in Schedule 2 of the ITC (HS) will either be restricted or prohibited. Restricted goods become available for export once a company has obtained the appropriate license, which are granted by the DGFT on a case-by-case basis. Prohibited goods are ones that cannot be exported at all.
Source:india-briefing.com
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