The Indian government is looking at increasing royalty fees on iron ore companies by 50%, Bloomberg reports.
This would require miners to give provinces 15% of their sales revenue, rather than 10%.
The Indian mining industry has responded to the proposal with claims that the measure would hit states' revenues. The Federation of Indian Mineral industries suggested that the royalty be lowered to 7.5% in order to promote growth at a time when iron ore companies are facing decreased demand and lower prices.
Miners and steelmakers could also lose some competitiveness on the international market if the proposal is adopted, industry representatives said.
The cabinet will deliberate the panel's recommendation later this month.
Meanwhile, iron ore prices are looking weak with China hinting that it might buy less of the metal in the coming months.
Australia lowered its price estimates for iron ore on Wednesday.
Creative Commons image by: Jai Kapoor