India to increase bauxite export taxes to aid aluminum makers

India proposes to raise export duties on bauxite to help local aluminum producers, which are facing a shortage of the raw material because of mining curbs.

Finance Minister Arun Jaitley proposed to double export taxes on bauxite to 20 percent in his budget speech to lawmakers in New Delhi today. The higher levy will boost local availability for smelters, including those of Sesa Sterlite Ltd. (SSLT), Hindalco Industries Ltd. (HNDL) and state-owned National Aluminium Co.

Prime Minister Narendra Modi’s government, which in May won the biggest Indian mandate in 30 years, is seeking to revive the nation’s metals industry to bolster economic growth from near a decade low, while narrowing one of Asia’s widest fiscal deficits. Environmental concerns and land-acquisition delays have impeded mining of raw materials from bauxite to iron ore, hampering the production of aluminum and steel among other metals used to build infrastructure.

Jaitley also proposed to impose a uniform import tax of 2.5 percent on all types of coal and plans to raise the import duty on flat-rolled stainless steel to 7.5 percent from 5 percent to help the industry. Domestic stainless steelmakers are experiencing “severe under-utilization of capacities,” he said.

Sesa Sterlite jumped as much as 3.1 percent to 303.50 rupees, while Hindalco rose as much 5.2 percent to 179.45 rupees in Mumbai trading. National Aluminium rose as much as 5.7 percent to 58 rupees.