Budget 2012: Key expectations from Mining & Steel Sector

India's mining industry has been on a strong growth
trajectory during the last decade. However, recently high taxes, a lot of
policy uncertainty etc. have had a serious impact on the industry. The mining
industry is, therefore, at a cross roads, and has urged the government to take
number of steps to provide a positive environment for growth. Following are key
expectations of the Mining & Steel sector from the Budget 2012:

Mining Industry

* Export Duty- Abolition
of the export duty on iron ores, as the recent hike in export duty to 30% will only discourage exports without
any giving benefits to the Indian Steel Industry

* Excise Duty- The
Central Government might decide to levy excise duty on minerals which are
currently exempted from excise duty but subject to VAT, although the Industry
believes that, considering the current fiscal situation, the status quo should
be maintained

* Taxation– A key
expectation of the industry is the introduction of a deduction for expenditure
on mine closure. Under the current regulations, a miner can surrender the
leased area only after restoring it, through reclamation, surface back filling,
removing dumps, plantation over waste rock dumps, etc. These activities involve
substantial expenditure, known as 'Final mine closure expenditure'. The
industry wants a deduction for such expenditure, in line with similar deduction
allowed to the petroleum industry under section 33ABA of the Income Tax Act.

Steel industry

* Infrastructure
Status– The industry's key demand is the grant of infrastructure status.
Steel firms have asked the Finance Ministry to grant this status, which would
ensure not only long term funds but also tax holidays for the steel
industry.

* Import Duty on HR
coils– An increase in import duty on the benchmark product – HR coils is
expected as surging imports, mainly from China, have been the industry's
greatest difficulty in 2011.

* Custom Duty on
Coal- The import of coal should be exempt from customs duty considering the
current situation of domestic coal availability.