India’s mining industry is urging the government to remove export duties on low-grade bauxite, retain the current duty structure for iron ore, offer tax concessions and introduce a government-backed insurance mechanism to shield overseas mining investments from geopolitical risks in the upcoming Union Budget.

A senior executive at the Federation of Indian Mineral Industries (FIMI) said the industry body has proposed scrapping the 15 per cent export duty on low-grade bauxite. India is self-sufficient in bauxite, particularly in Gujarat and Maharashtra, where low-grade deposits are dominant and largely unused by domestic industry. Removing the duty would support exports of these grades, the executive said.

On iron ore, the sector wants the government to maintain the existing zero-duty regime for low-grade ore. Currently, iron ore with less than 58 per cent iron content attracts no export duty, while higher-grade ore is subject to a 30 per cent levy. Industry representatives said low-grade iron ore is not consumed domestically and cautioned against any new duties.

A major new demand is the creation of a government-backed insurance mechanism for overseas mining investments, especially in Africa and South America, where political instability and geopolitical risks can threaten projects. Rajib Maitra, partner and sector leader at Deloitte South Asia, said the proposal mirrors the sovereign-backed guarantees extended to exporters through the Export Credit Guarantee Corporation.

Such a mechanism would help mining companies secure financing from banks and financial institutions, as conventional insurance often excludes political or financial instability. Maitra said the proposed cover would be particularly relevant for critical mineral projects, including lithium processing, rare earth separation and magnet manufacturing.

Separately, the industry is seeking a significantly larger push for coal gasification, with Budget support of Rs 350 billion. In January 2024, the Cabinet approved an outlay of Rs 85 billion to promote coal and lignite gasification. Coal gasification converts coal into syngas through high-temperature processing with limited oxygen or steam, and is being promoted as a cleaner industrial fuel to reduce emissions and dependence on conventional fuels.

A Deloitte report on Budget expectations noted that the metals and mining sector has outlined several tax-related demands. These include higher depreciation in the early years of projects and the introduction of investment tax credits to ease upfront capital expenditure for mining, mineral processing and downstream manufacturing.

The industry has also sought targeted tax credits for critical mineral projects, where India currently faces scale limitations and higher costs, and the reintroduction of the concessional 15 per cent corporate tax rate for new manufacturing units, which was discontinued in 2024 and replaced with the standard 25 per cent rate. In addition, companies are seeking conditional tax holidays for strategic greenfield projects.

Another key request is a reduction in basic customs duties on imported raw materials such as coking coal, a crucial input for the steel industry that is not available in adequate quantities domestically.