India already levies a 30 percent tax on exports of iron ore fines and lumps since December 2011. Along with mining and export curbs in key producing states Karnataka and Goa aimed at addressing illegal mining, the tariffs have helped cut India's iron ore exports by around 85 percent, or 100 million tonnes, over the past two years.
Iron ore pellets had been exempted from any duty previously given negligible exports out of India.
"However, in April-November 2013, exports of iron ore pellets have risen sharply, causing an apprehension about shortage of iron ore in the country," the Ministry of Finance said in a statement on Monday.
India's steel producers last month sought a tariff on exports of iron ore pellets to safeguard domestic supplies.
India's iron ore exports to China, most of them in the form of fines, dropped 65 percent to 11.7 million tonnes last year, Chinese customs data showed.
"I don't think the tax move will have much impact on the Chinese market," said an iron ore trader in Shanghai.
"Chinese buyers are not that interested in Indian pellets because the price is always high so they are sold mostly to the Japanese and Korean markets."
India's efforts to curb iron ore mining and exports via bans and higher taxes have choked the industry so hard that companies which have invested in the sector are throwing in the towel and exiting.
Top trader MMTC's (MMTC.NS) $80 million iron ore export terminal, ready since 2010, has never handled a cargo and now the company wants to spend $16 million to convert the terminal to ship coal.