Fighting CAD, govt will ask SC to lift iron ore export ban
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The government has decided to approach the Supreme Court's Central Empowered Committee to get the ban on iron ore export lifted.
The proposal is among the measures the government hopes will help reduce the current account deficit that has caused the rupee to plunge by over 9.5 per cent in calendar year 2013.
Before the ban, India was exporting iron ore worth over $ 7 billion, making it the third-largest exporter in the world. But after the 2011 Supreme Court ban on exports of most categories, shipments plunged to 18 million tonnes in 2012-13 from nearly 168 million tonnes in 2010-11.
Lifting the ban would be a huge relief for the government battling a global withdrawal of money from emerging markets, including India. In July for instance, foreign investors have withdrawn $3 billion from Indian equities and debt markets. Simultaneously, the commerce ministry has proposed reducing the 30 per cent duty on iron ore export which was imposed as a punitive measure.
The government has so far been working on a series of steps to curb imports, including that of crude, gold and other non-essential commodities, to cut trade deficit. But efforts to boost exports in the short term are limited as most markets for Indian exports are in recession or facing a growth slowdown.
Iron ore export could, however, be an exception as there is a pent up demand for iron ore fines in geographies the government is keen to explore.
The Supreme Court ban came in the wake of the Karnataka Lokayukta report about irregularities in the sector and was extended to Goa, effectively stopping exports from that state too, based on a report by its Central Empowered Committee.
In May, the committee allowed production after discussions with Karnataka's miners but refused to lift the ban on export.