India's Ministry of Finance recently announced its budget for the new fiscal year starting April and decided to raise import duty on non-alloy flat materials to 7.5% from the current 5%. Import duties on pelletizing equipment and beneficiation equipment were reduced from 7.5% to 2.5%; Import taxes on mining exploration equipment were also lowered to 2.5% from 7.5-10%; Export taxes on chrome ore will rise by 30% from the current 3,000 rupees ($60) per tonne.

The finance ministry's budget benefited domestic steel mills and the iron ore sector. CSVerma, president of the steel authority of India (SAIL), said the tariff hike on flat materials will increase the import cost of these products by at least rs 1,000 / t, or about $20 / t, which will help boost domestic steel consumption, benefiting domestic mills like SAILJSW. Steel consumption in India is expected to grow 8-9 per cent in the 2012-13 fiscal year.

The reduction of import tariffs for pelletizing manufacturing equipment and beneficiation equipment is aimed at encouraging higher value-added and increasing domestic iron ore supply. The move will benefit low-grade iron ore exporters, especially in Goa and Karnataka. Essar steel said, "Lowering the import duty on equipment will help improve our competitiveness in the construction or expansion of a pelletizing plant or concentrator." At present, Indian pellets have an annual production capacity of about 18 million tons, of which about 2.5 million tons are exported annually.

A cut in import duties on mine exploration equipment is also expected to encourage more exploration activity. In addition, the increase of export tax is aimed at curbing the export of chromium ore to meet the development of the domestic stainless steel industry.