Within weeks of the Prime Ministers Office pitching for relaxation of iron ore exports,the steel ministry and the National Manufacturing Competitiveness Council (NMCC) are trying to block it.
They have argued that lowering of the 30 per cent duty on exports of the mineral would raise the cost of production for domestic steel companies currently battling a downturn and rising input costs.
Prime Minister Manmohan Singh had recently suggested relaxing the duty on iron ore exports as a key measure to contain the nations current account deficit.
Accordingly,the commerce ministry has moved a note for the Cabinet Committee on Economic Affairs this month seeking reduction in duty of the mineral. Exports of iron ore had fetched the government nearly $7 billion before 2011 when it was banned.
The commerce ministry has argued that given the huge surplus stock of iron ore fines in the country owing to depleted exports,there is a need to incentivise its overseas sale.
But the steel ministry has countered saying of the total estimated reserves of about 25 billion tonnes,only a third can be mined. The rest is locked untapped in the Western Ghats as the Supreme Court has prohibited any exploitation there and other similar sensitive environmental zones. It has claimed demand for iron ore would shoot up with exports.
Steel secretary DRS Chaudhary has told expenditure secretary Sumit Bose in a letter earlier this month that considering that the Indian steel industry is passing through a difficult phase and is utilising only 82 per cent of its installed capacity due to depressed market conditions,it is imperative that access to higher quality of iron ore at reasonable prices is ensured for steel companies.
NMCC member secretary Ajay Shankar too has joined in suggesting the move to lower the duty should be aborted as the country needs to become a net exporter of finished steel from being a net importer currently.
To ensure the steel lobby is heard loudly,steel minister Beni Prasad Verma has told commerce and industry minister Anand Sharma in a letter last week that in the larger context of mobilising revenue for the economy,the government should always promote steel exports.
He has cited figueres to argue that domestic steel companies exported 5.25 million tonnes of finished steel in 2012-13 valued at $ 4.3 billion.
It makes more sense to to push for exports of steel valued at $800-1000 per tonne rather than raw materials valued at $100-120 a tonne, Verma wrote in his letter to the commerce minister.