India set to become net iron ore importer this fiscal: FIMI

Situation can improve provided govt ensures speedy clearances and fiscal policies are reversed to pre-2010 level

India is all set to become a net importer of iron ore in the current fiscal on dipping exports following lower production due to mining ban in some states and higher duties, Federation of Indian Mineral Industries (FIMI) today said.

The situation can, however, be improved drastically provided government ensures speedy clearances and fiscal policies are reversed to pre-2010 level, FIMI's President H C Daga said here. It may be noted that India was the world's third largest exporter of the iron ore in the not-so-distant past.

"Manufacturing has a big role in a country's economy and the growth of the sector depends on the mining sector for raw materials. Now, we are in need of a policy environment which ensures the prosperity of the mining sector," Daga said.

"There is an urgent need for speedy forest, environment and other necessary clearances for pending or new mining licences. Fiscal policies also need to be re-looked at," he added.

Increase in export duty coupled with a rise in railway freigh for iron ore had impacted the industry hard. The duty on iron ore exprots had been hiked to up to 30 per cent in a span of two years starting with December, 2009.

"As a result, the export of iron ore has declined to 18 million tonnes (MT) from over 100 MT in 2010-11. It is set to further fall to around 10 MT in current fiscal, making India a net importer of the raw material," he said.

"Now, iron ore in the form of pellets and lumps is being imported. In 2012-13, India has imported about 3 MT lumps and pellets. Imports during current financial year are expected to range between 20-24 MT. This is a strange scenario for India which has huge resources and surplus production capacity," he added.

India had earned $26.7 billion foreign exchange in three years between 2009-10 and 2011-12 from export of iron ore, FIMI said.

Meanwhile, production of the raw material has also come down to 115 MT in last fiscal from 218 MT in 2009-10, maninly due to the mining ban in major iron ore producing states that include Karnataka and Goa.