Any relaxation provided for iron ore exports will further cripple the domestic steel industry,open further floodgates for import of finished products and strain the already worrying current account deficit (CAD), says ASSOCHAM here today.

In a SOS submitted to the government,the chamber said,“to contain the CAD, relaxing the exports restrictions on iron ore is not a step in the right direction and rather if government ensures the availability of the raw-materials for domestic production, which is running at all time low utilization level, will contain the $6 billion imports of steel by India”.

The production of finished steel had seen a meagre growth of 2.5% in the year 2012-13 while consumption has grown up by 3.25%. The Indian steel demand is met by imports which have registered a rise of 15% in 2012-13, adds the ASSOCHAM.

While the steel production has gone up from 61.10 MT in 2009-10 to 78 MT in 2012-13 and projected at 84 MT in 2013-14, the iron ore production has dipped from 218.55 MT in 2009-10 to 140 MT in 2012-13.

The chamber says that there used to be a surplus of almost 100-110 million ton in the year 2008-09 and 2009-10, however this has come down to a level of meagre 15 million ton in the year 2012-13. The production of iron ore is expected to remain at the level of 140 million ton due to the gap in production in Karnataka, ban in Goa and strict enforcement of environmental regulations in Odhisa. However domestic steel industry requirement is more than 145 million tons in the current fiscal.

Government has taken a decision in the budget 2007-08 that Iron ore exports will be discouraged through various fiscal measures when there used to be a 100 million ton surplus availability. If the exports restrictions are relaxed in the present scenario, the iron ore supply situation for the domestic steel industry will further aggravate and impact the production of steel in the country. In such a scenario, country will have to increases its steel imports,which will further worsen the current account deficit. Even in the current scenario the steel import in the country is approximately $ 6 bn, which will further increase if iron ore shortage increase due to exports, adds the ASSOCHAM.


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