Steel industry in India is already having a shortage for Iron ore at present. They are now in more niggling situation with the government’s fresh proposal on removing restriction on raw materials exports. The restriction being removed from exports will bring along with it more scarcity for raw material in domestic steel industry.
The government is trying to bring down the country’s Current Account Deficit (CAD) and thus it needs to boost the exports and reduce certain restrictions on it.
Although, there is no such announcement about what measures will be taken to remove export restrictions, the miners are however expecting a concession of 30% on export duty and removal of freight charges being charged on the export material.
Steel companies are producing less than their capacity of production. In 2012-13 Indian steel industry had produced a total of 72 MnT of finished product in comparison to its 100MnT capacity production value. Iron ore production for year 2012-13 in India was around 140MnT which is expected to fall down in 2013 as several mines form Karnataka are not yet approved for resuming mining operations and Goa is also out of production.
“It will be a disaster for the steel industry, as we are already facing shortage of Iron ore and there is not enough production of ore in the country,” said Seshagiri Rao, Joint MD and Group CFO, JSW Steel.
However, Iron ore can be exported from eastern states such as Odisha and Jharkhand.
Indian steelmakers will now need to increase the import of raw material to curb its scarcity. Instead of exporting the raw material the government should think of exporting the finished products to bring down CAD.