MINING TAX RULING BY SC COULD HIT WIDE RANGE OF PRODUCERS: S&P

A shifting tax landscape for mining companies in India will have a pass-on effect on steel and other industries, and ultimately on the Indian consumer, asserted S&P Global Ratings.

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This comment from the global credit rating followed the July 25 Supreme Court ruling that granted state governments the power to tax mineral resources and clarified that royalties paid by miners do not qualify as taxes.

"The ruling might elevate production costs, affecting miners' profitability and future investments," said S&P Global Ratings credit analyst Anshuman Bharati.

"This in turn could reverberate to sectors that consume these materials, such as steel, aluminium, cement, oil and gas, and coal," Bharati said.

While it is unclear whether all states will impose such taxes or at what rate, increased mineral prices due to these taxes will raise costs for consumers and downstream industries, the rating agency said in a note on Wednesday.