The Associated Chambers of Commerce and Industry of India, (ASSOCHAM) has appealed to the Government against relaxing restrictions on iron ore exports in order to control India’s rising Current Account Deficit (CAD).
“Any relaxation in export restrictions on iron ore will adversely impact the prospects of India’s steel industry, which is already reeling under severe crisis due to non-availability of iron ore for last couple of years owing to suspension of mining in Karnataka and Goa by the Supreme Court coupled with restrictions on undertaking mining activities in Odisha by the State Government,” said ASSOCHAM in a communication addressed to Union Finance Minister P Chidambaram.
In its letter to the Finance Minister, ASSOCHAM urged the Centre to make iron ore available to the Indian steel producers instead of exporting the same as they are operating at lower capacity utilisation. It would also help reduce steel imports mainly from Japan and Korea, which under the garb of the Foreign Trade Agreement (FTA), are dumping their cheap steel into India.
“Considering the rising steel demand, domestic industry is likely to consume almost all iron ore fines, lumps and sub-grade material produced in the country and might even have to import iron ore to fulfill its demand. So it won’t be a wise decision to relax closure on iron ore exports,” said national secretary general of ASSOCHAM DS Rawat.
“We can control the CAD by reducing imports of finished steel and coking coal as India imported about eight million tonnes (MT) of finished steel and about 35 MT of coking coal worth about $5 billion and $7 billion respectively,” said Rawat. “The Jharia Coal Field in Jharkhand’s Dhanbad district with coking coal reserves to the tune of about 19 billion tonnes must also be developed further to reduce coking coal imports,” he said. Strict enforcement of environment and forest laws along with other regulatory compliances has led to a decline in iron ore production in India. The iron and steel industry is facing acute iron ore shortage due to a plethora of regulatory and compliance issues, especially in the States of Karnataka and Odisha.
In case of Karnataka, even the apex court has mentioned that iron ore can be used only for meeting requirements of steel plants and associated industries located in Karnataka and its adjoining States and exports be permissible only for materials which steel plants and associated industries are not willing to purchase on or above average price realized by the Monitoring Committee. Highlighting all the issues concerning the domestic iron and steel industry, ASSOCHAM has thus advised for judicious utilization of exhaustible natural resources for sustainable social and economic development thereby overlooking the short term economic benefits.