Sharma hints at approaching court to resolve iron ore impasse

The government today indicated it may approach the Supreme Court to resolve the impasse on iron ore mining ban in some states which is also having an impact on the country's current account deficit.

"Last 2 years iron ore exports were not there and that has affected us. Iron ore exports have gone down by almost 60%. This is something which we are taking up. We are keen that India starts export of iron ore again, which will earn precious foreign exchange," Sharma told reporters here.

He added that "we will, if required, in case of states where some problem exists, take it up also with the judiciary. This is our considered view."

Last month Finance Minister P Chidambaram had also said the government is keen to revive iron ore mining and the Mines Ministry had moved or would move the Supreme Court to seek relaxation in some of its orders on the mineral.

Goa, Karnataka and Odisha account for most of the iron ore production, which stood at about 140 million tonnes (MT). Of the three states, mining is banned in Goa for about a year now and the Supreme Court is slated to hear the matter from September 17 onwards.

In Karnataka, the mining ban has been partially lifted by the apex court in April this year but production is yet to pick up due to other regulatory issues including expiry of leases for several mining lease holders.

The current account deficit (CAD) touched a historic high of 4.8% of GDP in the last fiscal. The rise in CAD was mainly attributable to high imports of gold and petroleum products, though fall in iron ore exports also had its role in widening the gap.

According to official figures, share of iron ore has fallen to 0.55% in India's total exports in the last fiscal from a high of 3.35% of 2009-10. In value terms, it has declined by nearly 60% in 2012-13 to Rs 8,984 crore, while in terms of quantity, it has fallen by over 70% to 18 MT.

The mining ban in Goa has been one of the major factors in decline in iron ore exports from India as the state used to export about 90% of its 50 million tonnes (MT) production.

Yesterday, Commerce Secretary S R Rao had said that his ministry has floated a Cabinet note on reducing export duty on the mineral, which is currently at 30% for both its varieties, lumps and fines. While Mines Ministry has been supportive of the idea to reduce duty, Steel Ministry has not been in favour of it.

The Commerce Minister, however, said that given the international prices and market, "we need not be seriously concerned about that (reducing the duty)".