India’s Planning Commission recommends limiting iron-ore exports.

KOLKATA - India’s Planning Commission has recommended quantitative restrictions on iron-ore exports from the country, further muddying waters for the government, which was already facing dissension on whether to liberalise such exports.

In a communication to the Union Cabinet, the commission said that the government needed to take measures to contain exports of minerals, including iron-ore, through quantitative limits on shipments overseas.

However, it was not known whether the commission has recommended specific quantities as export limits

The Planning Commission’s stand came at a time when the Indian government was facing conflicting stands from various Ministries on easing various financial disincentives for iron-ore exports.

Easing the financial disincentives for iron-ore exports - such as export tax and higher rail freight charges for export shipments - has been brought back on the agenda in the face of government’s exhortions to ramp-up exports to tackle pressures from a rapidly rising current account deficit.

In fact, earlier this month, an inter-Ministerial group set up to boost dollar inflow from higher exports of iron-ore, failed to arrive at a consensus owing to the conflicting stands of the Ministries of Finance, Commerce, Steel and Mines.

The Commerce Ministry maintained that the country had a surplus of 100-million tonnes of ore as, owing to the current slowdown in the manufacturing sectors, demand for ore had fallen, which meant this surplus could be put into the export market.

However, this was opposed by the Steel Ministry, which held that this was a short-term view, as conservation of minerals like iron-ore should be part of the long-term plan of India to increase steel production to 300-million tonnes a year.

The move by the Commerce Ministry to cut the 30% iron-ore export duty has been hanging fire as these debates unfold.

While the Prime Minister has backed the Commerce Ministry to reduce the export duty to benefit aggregate exports from the country, the Steel Ministry has opposed it.

In a communication to the Commerce Ministry, Steel secretary D R S Chowdhury observed that lowering the export duty on iron-ore at this juncture would snatch away the only competitive edge that the domestic steel industry had vis-à-vis other global steel producers.

He also pointed out that supplying overseas steel mills with cheap Indian iron-ore would further impact domestic steel industry, which was, in any case, burdened by poor and high-cost infrastructure and domestic cost of capital.

The Planning Commission’s quantitative restrictions, therefore, brought a fourth element to the government’s agenda, others being the complete ban on exports as recommended by the Shah Commission probing illegal mining, the easing of financial disincentives and maintaining the status quo, an official in the Mines Ministry said.

Indian iron-ore exports crashed 64% to $1.6-billion in 2012/13 from $6.4-billion in 2011/12, following the ban on iron-ore mining in provinces like Karnataka and Goa, stiff export tax and higher railway freight charges.

Source : miningweekly.com