Budget Provision The budget proposes to reduce surcharge on domestic companies to 7.5% from 10%.
The budget proposes to increase excise rate from 8 to 10%
Budget Impact
During the current budget there has been no change made in the export duty of iron ore, which is positive for Iron ore exporting companies. The steel Industry in its pre-budget expectations had asked for hike in export duty.
In the Central Plan, there has been a declining trend seen in case of NMDC's targeted level of production. In the Central Plan 2010-11 National Mineral Development Corporation (NMDC) has targeted 20 million tonnes of Iron Ore production as compared to 23.6 million tonnes of Iron ore production targeted in Central Plan 2009-10.
Companies to watch out for
Sesa Goa, NMDC
Outlook
The excise duty is a pass through item, and hence hike in excise duty from 8% to 10% will not impact the iron ore producers. During the current budget there has been no change done in the export duty of iron ore, which is positive for iron ore exporters. Recently only with an aim to curb iron ore exports, during the month of December 2009 government had imposed an additional 5% export duty on iron ore fines and lumps. The government had also raised export duty on iron ore lumps to 10% from 5% and on iron ore fines to 5% from nil. The move of keeping the export duty on iron ore unchanged is expected to benefit companies like Sesa Goa (whose majority of revenue comes from export). Overall the budget is positive for the iron ore exporting companies.
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