Locking horns with its Commerce counterpart, the Steel Ministry has rejected a proposal of state-run trading agency MMTC for channelising the country's entire iron ore exports through it.
Opposing the idea mooted by MMTC, the Steel Ministry has said that canalising iron ore exports was not possible as the government has favoured doing away with such a system as per the recommendations of the Hoda Committee.
"Ministry of Steel opposes the proposal made by MMTC. In fact, Department of Commerce should implement the decision of the Cabinet approving Hoda Committee's recommendations... pertaining to discontinuation of the system of licensing and canalisation currently in operation for the export of iron ore," the Steel Ministry said in a letter to its Commerce counterpart.
In its proposal, MMTC had suggested a review of iron ore export policy and channelising of the mineral, irrespective of the grades, for overseas shipments through it.
The rationale given by the trading agency in favour of its suggestion was better negotiating leverage for iron ore exports, resulting in improved sales realisation for mining industry, and higher trust in MMTC by importers.
However, not buying the idea, the Steel Ministry said it would not be prudent to nominate a single company as the sole trading agency for any item, as it may act as a non-tariff barrier to the trade in the era of economic liberalisation.
Instead, the Steel Ministry favoured market mechanism of demand and supply to be allowed for determination of iron ore export prices. Iron ore is a vital raw material in steel-making.
At present, MMTC, under the administrative control of the Commerce Ministry, facilitates exports of about 3.5 million tonnes of iron ore produced by state-run miner NMDC. India annually exports over 100 million tonnes of iron ore, of which nearly 85 per cent is fines.