Singapore (Platts)--28Feb2013/655 am EST/1155 GMT

Indian iron ore export tariffs will remain unchanged in the coming financial year, finance minister P Chidambaram said Thursday in his presentation of the Union Budget for the April 2013-March 2014 fiscal year.

But industry and market participants said there was general expectation of a reduction in ore export tariffs ahead of India's general elections scheduled for early 2014.

India has been levying a 30% export duty on exports of iron ore fines and lumps since December 2011, while pellets are exempt from export tariffs.

Industry bodies such as the Federation of Indian Mineral Industries (FIMI) had called for ore export tariffs to be reduced ahead of Thursday's budget announcement, but had little expectation of success given mining bans and ongoing investigations into mining operations in various states.

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The downtrend in Indian iron ore export volumes in recent years, among other factors, has been adding to India's current account deficit woes.

Sources said New Delhi might therefore pare ore export tariffs either when it unveils the nation's foreign trade policy in March, or later in the year as a populist measure ahead of the 2014 elections.

"Just before the elections, we could see (iron ore) export duties come tumbling down to 15% or so," an Odisha-based iron ore miner told Platts, adding that lower ore export volumes had also been hurting rail freight revenues.

India's railway budget unveiled Tuesday estimated earnings of Rupee 10.84 billion ($199 million) during the 2013-14 fiscal year from transport of 4 million mt of iron ore for export.

This is down from Rupee 25.85 billion earned in fiscal year 2011-12 from transport of 9.67 million mt of iron ore for export, budget documents showed.

Iron ore exports from India fell 68% year-on-year to 16.35 million mt between April 2012 and January 2013, according to provisional data from FIMI.

This was due to a combination of high export tariffs, high rail freight rates, and a drop in domestic iron ore output as a result of mining bans in Goa and Karnataka and investigations in other states such as Odisha.

--Anitha Krishnan, anitha_krishnan@platts.com
--Edited by Jeremy Lovell, jeremy_lovell@platts.com

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