The government's decision to hike duty on iron ore exports from five per cent to 50 per cent is a step in the right direction and promotes value addition within the country to meet growing demand for steel, Associated Chambers of Commerce and Industry of India (Assocham) said on Saturday.
India exported iron ore worth $4.7 billion in 2010-11 and imported finished steel worth $11 billion, thus contributing negatively to the widening trade deficit and draining foreign exchange reserves.
"Conservation of iron ore is in the national interest as reserves may run out rapidly due to projected growth of the economy," industry body Assocham said.
"We have always advocated a complete ban on iron ore exports. However, discouraging them through fiscal measures is an appropriate solution to utilise large mining, infrastructure and port capacities created for iron ore," Secretary General D S Rawat said.
A nine per cent growth in the gross domestic product (GDP) would create demand for 113 million tonnes (mt) of steel and 206 mt of iron ore by 2016-17 as the country embarks on several infrastructure projects. Production of iron ore in the country currently stands at 208 mt, of which 98 mt is exported.
"It is imperative that India conserves its iron ore resources to safeguard long-term sustainability of the steel industry," said Rawat, adding that the crackdown on illegal mining by the Supreme Court has led to a severe shortage in availability of iron ore for the domestic steel industry.
China had imposed a duty of 40 per cent on exports of coal and coke for value addition within the country. This led to creation of the world's largest steel manufacturing capacity and accelerated China's GDP growth, he said.