Business India
Nod To Market Forces Image Credit: Business India
Nod To Market Forces Image Credit: Business India

Nod To Market Forces 

Ministries in iron ore price cap tussle 

Rakesh Joshi

A serious tussle between the ministries of steel and mines has come to the fore with the latter categorically rejecting the former's proposal for capping of iron ore prices. The idea of reining in iron-ore prices stemmed from steel-makers' continuous tirade against 'arbitrary pricing' by state-run NMDC, which private miners mostly follow. Steel makers also said that their demand was aimed at stopping `Sensex-like' movement of the raw material that is detrimental to the interest of the steel producers.

At one point, it appeared that the government was seriously, considering the demand following hectic lobbying by the steel industry. This was said to be part of the government's efforts to aid the domestic steel industry, to arrest the surge in imports and help local producers realise better prices and margins. The move, which had the iron ore industry worried, led to counter-lobbying, with iron ore miners arguing that a cap will severely dent the budding revival signs in the industry that has been plagued by plunging exports. According to Federation of Indian Mineral Industries (FIMI), India's exports slumped from a peak of 117 million tonnes in the year to March 2010 to 4.5 million tonnes last year. "The government cannot come in the way of a market mechanism because there has to be a free market and market is determined by demand and supply. If supply is more, then there is no cause for steel ministry to fix the price," R.K.

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