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NEW DELHI, Aug 22 (Reuters) - India is likely to cut the iron ore export duty to 20 percent from 30 percent to boost shipments and help narrow its current account deficit, government officials said, even though the steel ministry wants to conserve it for local mills.
Asia's third-largest economy is desperately looking for ways to raise foreign currency inflows and arrest a steep fall in the rupee, which has been hitting new lows nearly every day.
Prime Minister Manmohan Singh said in July the government was trying to remove constraints in the export of iron ore, after shipments slumped to 18 million tonnes in 2012-2013 from a high of 117.4 million tonnes in 2009-2010.
"We've agreed with the commerce ministry's proposal to cut the duty to 20 percent," Mines Minister Dinsha Patel told reporters on Thursday.
The commerce ministry recently sought the steel ministry's views on the proposal, a steel ministry official told Reuters, adding that the finance ministry will take a final decision.
"We'll oppose the move, but given the situation with the rupee, there could be a cut," said the official, who did not wish to be identified.
Finance Minister P. Chidambaram said on Thursday there was a need to find ways to revive iron ore exports.
Senior officials in the mines and steel ministries could not say when a decision was likely.
The steel ministry and steel companies such as JSW Steel Ltd have opposed reduction of the duty, saying it could lead to a shortage of iron ore for making steel.
Capacity utilisation at Indian steel mills hit an all-time low of 82 percent in the last fiscal year due to a shortage of iron ore following mining bans in some states, according to D.S. Rawat, secretary general of lobby group ASSOCHAM.
But H.C. Daga, president of the Federation of Indian Mineral Industries (FIMI), denied there was a shortage, saying that steel companies "want a surplus of ore so that prices stay low".
FIMI Senior Vice President Basant Poddar said miners would lobby with various government departments for a further reduction of the iron ore export duty to 5 to 10 percent. (editing by Jane Baird)