KOLKATA: The National Manufacturing Competitiveness Council (NMCC) has warmed up to the cause of the domesticsteel industry by arguing in favour of retaining export restrictions on iron ore.
This will add weight to the industry's clamour against the government's proposed move to ease export restrictions on iron ore and boost forex revenues.
While steel secretary DRS Chaudhary has opposed it in a letter to commerce secretary S R Rao, two of the country's largest private steel players, JSW SteelBSE -1.76 % and Essar Steel, have also written to the government against it.
The industry moves gather urgency since the mines and commerce ministry officials are likely to discuss the proposal soon. Last week, the rupee faced its worst onslaught, tumbling nearly 6% in value against the US dollar.
Among other steps, the government is also planning to allow iron ore exports to earn foreign exchange and improve the current account deficit (difference between a country's exports and imports).
In a letter to the union commerce secretary S R Rao, member secretary NMCC, Ajay Shankar said: "The current regime of export duty and export freight on iron ore should continue till the restrictions on mining and other regulatory decisions are eased to allow resumption of iron ore production.
This is necessary to ensure capacity utilisation of domestic steel industry and ramp up of additional capacity." The NMCC member secretary further said: "The domestic industry has adequately ramped up pelletisation capacity to use domestic fines and is using fines in increasing quantities. The traditional argument of need for exports due to lack of demand for fines, has now lost most of its relevance. Some 25 mt of fines was used in Karnataka alone."
JSW Steel and Essar Steel have also opposed the proposal to ease exports. Highlighting severe ore crisis being faced by JSW Steel, chairman Sajjan Jindal requested the PM to ensure ore availability for producers that can help raise output levels and curb steel imports. Joining the issue, steel secretary has also said if domestic steel industry fails to meet demand, consumers swill be forced to import steel. "While the country has emerged as a net importer this will further drain forex reserves," Chaudhary said in his letter to Rao.
Essar Steel chief commercial officer, H Shivramkrishnan has written to TKA Nair, advisor to the prime minister saying, "removal of export taxes on ore would spell disaster for the domestic steel industry." Pelletisation and sintering facility is likely to touch 170 mt by 2015 which will require domestic supply of fines, the company said.
In the wake of the mining crisis, India's ore production is estimated to drop from 218.7 mt in 2009-10 to around 110 mt in 2013-14, thus falling short of domestic requirement of 130 mt during the year.