NEW DELHI: The government on Thursday hiked export duty on iron ore lumps by 5 per cent to 15 per cent to discourage its shipments and cool down the prevailing prices of the vital input for making steel.

The export duty on iron ore fines would remain unchanged at five per cent, the revenue secretary, Mr Sunil Mitra told reporters here.
“Export duty on iron ore lumps has been increased to 15 per cent from 10 per cent,” Mr Mitra said.
Mr Mitra further said that customs duty on stainless steel scrap – used mainly in making the alloy-- has been cut to 2.5 per cent from 5 per cent.
The duty hike on iron ore lumps, primarily used by domestic producers to make steel, would help in cooling its prices which has increased by about 90 per cent and is hovering in the range of US $120-160 per tonne as against year-ago period.
The move may help bring down the input cost pressure on steel companies and could lead to reduction in prices of steel, industry observers said.
In 2008-09, iron ore exports amounted to 106 million tonnes, about 85 per cent of which were fines.
The Union Finance Minister, Mr Pranab Mukherjee announced changes in tax proposals that will benefit coffee growers, new hospitals and construction sector while making it clear that service tax on domestic travellers would be Rs 100 per domestic journey and a maximum of Rs 500 for international travel.
Mr Mukherjee announced these concessions that would cost the exchequer Rs 300-400 crore a year but did not touch the demand for rolling back the hike in petroleum and fertiliser prices on which the entire opposition walked out before Lok Sabha passed the finance bill, 2010.
Explaining the reasons for his inability to concede the opposition’s demand, he said the financial position was such that oil marketing companies faced an under recovery of Rs 85,000 crore this year apart from heavy outgo on account of subsidies, interest and other payments.
On account of the new coffee-debt relief package, the outgo from government kitty will be Rs 241.33 crore, but benefit to farmers will be worth Rs 362.82 crore.
Replying to the debate on the finance bill that was passed by voice vote with official amendments, Mr Mukherjee said with a view to giving an impetus to the health sector, construction of hospitals with at least 100 beds anywhere in the country would qualify for tax concessions based on their investment.
The government has also provided tax relief to the construction sector by levying the newly imposed service tax only on 25 per cent of the total value of the property, including land, compared to 33 per cent proposed in the budget.
Mr Mukherjee also exempted from service tax low cost housing for the urban poor under the Jawahar Lal Nehru National Urban Renewal Mission and under Rajiv Awas Yojna.
Referring to the imposition of service tax on domestic and international air passengers, he said he has received a number of representations expressing concerns that this levy would affect the aviation sector and make air travel prohibitive.
“I would like to clarify that it would not be so. The effective rates of levy, when they come into effect, would be a maximum of Rs 100 per travel for domestic journey in any class and a maximum of Rs 500 per travel for international journey for economy class.
“Further domestic travel to and from the North Eastern sector would be exempt even from this moderate tax,” he said.
With the passage of the bill, the three-stage budgetary process has been completed in the Lok Sabha. The bill will go to Rajya Sabha for being returned.
The revenue secretary said the changes made in the finance bill will have revenue implications of Rs 300-400 crore this fiscal.
On the issue of duty hike on petrol and diesel, Mr Mukherjee later told reporters that he couldn’t afford taking additional burden by rolling back excise and customs duties on fuels. “Any additional burden at this juncture could indulge in financial profligacy that I cannot afford to do... Oil price is so volatile...When will it go up...Nobody knows,” he said.
Replying to the debate on the finance bill, the Finance Minister restored customs duty concessions to the Ostomy appliances, used to treat cancer patients. In another move, he reduced basic customs duty on 11 drugs, including two anticancer ones and one for AIDS to 5 per cent.
To promote faster development of slum rehabilitation project, Mr Mukherjee announced tax rebates on the basis of investment to developing and building of housing projects under the slum rehabilitation scheme.
On the educational front, the minister extended service tax exemption to vocational courses provided by the training institutes registered under Skill Development Scheme of the labour ministry.
In another dole-out, Mr Mukherjee reduced excise duty on hand-rolled cheroots priced up to Rs 3 per stick to 10 per cent and additional excise duty to 1.6 per cent. He also extended excise duty exemption to scented supari.
Mr Mukherjee also reduced excise duty to 4 per cent from 8 per cent on units that manufacture cartons from corrugated paper or paperboard, besides excise duty on waste paper from 10 per cent to 4 per cent. Exemption from excise duty was extended to all types of packaging materials manufactured by SSIs that bear the brand name of another persons.
To help contain the soaring cotton prices, he left a space to increase export duty on raw cotton from Rs 2,500 per tonne to Rs 10,000 per tonne in future to disincentivise their exports and curb abnormal price rise of the commodity. But currently, the duty is retained at the existing level
While he brought components that are used for earthmoving machinery like loaders, excavators under excise duty on their retail sale price, just like automobile components, the minister extended the customs duty exemption to parts and components of tunnel boring machines, which are currently available to the such full-machines.
He exempted acetate rayon tow, used in manufacturing cigarette filter rods, from special countervailing duty of 4 per cent. He also removed basic customs duty on optical disc drives, flax fibre and yarn.
On the corporate front, Mr Mukherjee announced tax exemption on the transfer of shares by shareholders in case a company converts itself to Limited Liability Partnership structure, the new kind of business entity introduced in the country a year ago.