India and Brazil are the only nations with such high class iron ore with iron content of between 60-65% and India is estimated to have 18 billion tons of high grade ore, albeit in inaccessible forested areas. Since there are very few benefits and infrastructure benefits accruing from the Government, domestic steel players have to contend with raw material exporters, who are usually politically backed, sending away one of the few advantages they have against their competitors.
Instead of focusing on domestic steel production, cabinet ministers have been advocating export of ore as quick means to achieve balance of payment (with China) and business parity (with Japan). The Federal Government must abandon this plan to export iron ore and provide liberalization for domestic production of steel to all players-domestic and global. While it is correct to say that export of ore will damage domestic steel production incentives, it is incorrect to argue that allowing global steel players in will only result in exports of raw materials. WB does have vested stakes with domestic players as
SAIL recently announced Rs. 10,300 crore (USD 2.2 billion) in that state but the message it sends is beyond such petty considerations and is in the national interest.
Furthermore, while it is correct to argue for domestic investments to add value
to raw materials, it does not make sense to argue that only the State Government
has the right or the Federal Government has no right to interfere. After all,
the mines are a national resource and while the states should reap a majority of
the benefits of the raw material, their reward should be measured in terms of
their cooperation to the national government to start industries, lack of
corruption, infrastructure investments, and transparency. For example, the
opposition by the
Jharkhand Government to SAIL's plan to invest Rs. 8000-10,000 crore (USD 1.739-2.173 billion) in Chiria because they favored other players smacks of underhand dealings especially because they are not disclosing alternate proposals that would benefit the state even more.
communists have already opposed the export of iron ore
citing "China and some other countries" as examples.