The government may replace the flat tax on exports of iron ore with one linked to the grade of the mineral after some Chinese steelmakers boycotted purchases of the commodity from India.

"The government could restructure the tax in terms of iron ore grades where a lower grade may have a reduced duty with some adjustments for higher grade ore," AS Firoz, an independent steel analyst , said on Wednesday in an interview in Singapore. A lower tax on iron ore fines, a grade which has a lower ferrous content and accounts for 85% of India's exports of the mineral, may deter Chinese mills from seeking more supply from Australia and Brazil.