Increase iron ore supply to steel industry to curtail $6 bn worth imports, bring down CAD: Assocham

The industry body Assocham recently urged the government to increase iron ore supply for domestic steel industry which is currently running at an all time low utilisation level in the country as such a move would bring down steel imports worth a whopping six billion dollars, promote steel exports and curb the ever-rising current account deficit (CAD).
“Iron ore exports of a 100 million tonne (mt) would earn India $10 billion while the country would earn $8-9 billion through exports of just 10 mt steel, besides value addition to the raw material would lead to employment generation, capacity building and various other benefits,” highlighted a study titled ‘Iron Ore Exports: Threat for Indian Steel Industry,’ conducted by Assocham.
“Rupee depreciation has made domestic steel sector 22 per cent more competitive thereby giving a huge impetus to the finished steel exports as such relaxing the exports restrictions on iron ore would further worsen India’s CAD,” said an Assocham spokesperson while releasing the study.
Highlighting that both demand for and production of steel is growing steadily, Assocham study has projected that India’s steel production might reach 81 mt in the current year as against 78 mt in 2012-13. Considering that iron ore production in the country has been declining significantly, India is likely to witness a shortfall of about 30 mt as iron ore production is likely to stay at about 100-110 mt in the current year and it requires about 140 mt of iron ore to produce 81 mt of steel, highlighted the Assocham study.
“Thus any relaxation of iron ore export duty will further worsen the situation thereby making it difficult for domestic steel producers to survive,” said the chamber’s spokesperson.
Owing to the unavailability of iron ore, capacity utilisation of crude steel in India has come down to about 82 per cent from about 88 per cent a year ago, further highlighted the study.