"Sail was summoned to the CBI office here for interrogation and arrested later," a CBI official told PTI.
He is the second MLA to be arrested in the case this week.
BSR Congress MLA Suresh Babu, a nephew of B Sreeramulu, former minister and close associate of mining baron G Janardhana Reddy, was arrested yesterday.
The scam was exposed by former Karnataka Lokayukta N Santosh Hegde, who in his report, had said 7.74 million tonnes of iron ore were illegally exported between 2006-07 and 2010-11, causing huge loss to the exchequer.
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