Karnataka Mining Sector Faces Major Setback Over Proposed 30% Export Duty

The Union government’s proposal to impose a 30% export duty on low-grade iron ore from October has triggered strong opposition from the mining industry in Karnataka. The Federation of Indian Mineral Industries (FIMI) has warned that the move could severely affect both mining and steel production, leading to massive revenue losses and jeopardising thousands of livelihoods across the State.

Currently, exports of low-grade iron ore, typically with less than 58% iron content, attract no duty. However, the Centre’s new proposal seeks to increase the duty to 30%. Industry experts argue that this decision, combined with Karnataka’s long-standing Maximum Permissible Annual Production (MPAP) cap, will stall growth, erode revenues, and make mining economically unviable.

According to FIMI (South) director S.S. Hiremath, the discriminatory MPAP restriction has already resulted in annual revenue losses exceeding ₹6,500 crore, while more than 220 million tonnes of resources remain untapped. The MPAP cap was originally imposed by the Supreme Court in 2013 as a corrective measure to address regulatory lapses. Despite improved monitoring systems and environmental clearances, Karnataka remains the only mineral-rich State under this limitation.

The proposed duty is also expected to cause nationwide repercussions. States could collectively face losses of over ₹16,000 crore, while nearly half a million people dependent on mining-related activities may lose their livelihoods. FIMI cautioned that such restrictive policies would undermine India’s ambitious infrastructure and economic growth targets, given the essential role of iron ore in steel production.

Interestingly, this is not the first time export duties have stirred controversy. In 2011, the government imposed a 15% duty on low-grade iron ore, later raised to 50% in May 2022 before being withdrawn following industry protests. The reintroduction of a 30% levy has reignited fears of long-term damage to the sector.

Industry leaders have urged the Centre to reconsider the proposal and permanently remove the MPAP cap. They argue that easing these restrictions will not only boost Karnataka’s mining potential but also strengthen India’s position as a key driver of industrial and economic development.