Ministries at loggerheads over ore export

Lobbying war broke out among ministries over government move to allow iron ore exports and slash duty on them. While commerce, mines and finance ministries backing the move, steel and heavy industries ministries have strongly opposed it.

Finance Minister P Chidambaram, fighting the current account deficit, favoured increasing iron ore exports in his latest draft note to the cabinet. He also argued for reducing the export duty on the iron ore from 30 per cent to 20 per cent.

Despite winning the backing of commerce and mines ministries as well as the Prime Minister’s Office, the note was opposed by steel and heavy industries ministries.

The steel ministry argued that the domestic steel makers can utilise the ore that is exported. Contrary to exporters’ claims of shipping only low-grade ores, raids in several ports have proven that they were exporting high-grade instead. 

Steel Minister Beni Prasad Verma, in his letter to Commerce Minister Anand Sharma, argued that it “makes more sense to push exports of steel valued at $800-1,000 per tonne rather than raw materials valued at $100-120 per tonne”.

Heavy Industries Minister Praful Patel similarly wrote to the prime minister saying starving domestic steel industries of the critical raw material will result in lower production.