New Delhi: Ahead of the Union Budget 2026–27, Sesa Goa Limited, the iron ore arm of Vedanta Resources, has urged the government to introduce targeted fiscal incentives to make beneficiation of low grade iron ore commercially viable in India.
The company has highlighted that while India continues to post record iron ore production, a large portion of domestic reserves remains locked in low grade material that cannot be directly used by steelmakers without beneficiation. Beneficiation is the process of upgrading iron ore by removing impurities such as silica and alumina to improve its suitability for steel production. However, high capital expenditure, energy costs, and infrastructure constraints have limited capacity expansion across the country.
Iron Ore Production Continues to Rise
India is currently the world’s second largest producer of iron ore. Production has remained strong over the last two fiscal years, supported by stable demand from the domestic steel sector.
Table 1: India Iron Ore Production Trend
| Fiscal Year | Production Volume million tonnes | Year on Year Growth |
|---|---|---|
| FY 2023–24 | 276.7 | NA |
| FY 2024–25 | 289.4 | 4.6 percent |
The FY 2024–25 output of nearly 289 million tonnes marked an all time high, reflecting steady mining activity in Odisha, Chhattisgarh, and Karnataka. Despite this growth, industry executives point out that production quality remains a key challenge, with beneficiation capacity lagging far behind raw ore extraction.
Beneficiation Capacity Remains a Bottleneck
India’s existing beneficiation infrastructure is insufficient to process the growing volume of low grade iron ore generated at mine heads. According to industry estimates, only about one fifth of total iron ore production currently passes through beneficiation plants.
Table 2: Iron Ore Beneficiation Capacity in India
| Parameter | Estimated Volume |
|---|---|
| Current beneficiation capacity | 136 million tonnes per annum |
| Expected capacity by FY 2025 | 143 million tonnes per annum |
| Projected capacity by FY 2030 | 170 million tonnes per annum |
Sesa Goa has estimated that nearly 300 million tonnes of low grade iron ore is lying unutilised across mine sites due to the lack of economically viable processing options. The company has argued that fiscal incentives in the national budget could significantly improve project feasibility and accelerate investment decisions.
Strategic Importance for Steel Sector
India has set an ambitious target of achieving 300 million tonnes of crude steel capacity by 2030. Achieving this goal will require sustained availability of quality iron ore feedstock. Without large scale beneficiation, steelmakers may increasingly face challenges in sourcing suitable raw material, particularly as high grade reserves continue to decline.
Industry experts note that expanding beneficiation capacity would allow low grade domestic ore to substitute higher grade imports, improve resource efficiency, and reduce long term cost volatility for steel producers.
Policy Support Under Discussion
Sesa Goa has called for measures such as duty relief on beneficiation equipment, tax incentives for processing plants, and improved infrastructure support to reduce operating costs. According to the company, such policy interventions would not only unlock stranded resources but also generate additional employment and government revenue through higher value addition.
With the Union Budget approaching, stakeholders across the mining and steel value chain are closely watching whether beneficiation incentives find a place in the government’s broader strategy for raw material security and industrial growth.