Business Standard reported that Iron ore exports from India are likely to decline 72% this year thanks to a number of measures adopted by the government to preserve the key natural resource for domestic use.

Investment bank Barclays Capital forecasts India’s iron ore exports to remain at 17.3 million tonne for financial year ended March 31st 2013 down sharply from 61.8 million tonne in the previous year and an even sharper 120 million tonne in 200910.

Data compiled by apex industry body, the Federation of Indian Mineral Industries showed total iron ore exports at 15 million tonne in the first 8 months of the current financial year, compared with 36 million tonne in the previous year. This is a decline of 62.3%.

Mr RK Sharma secretary general of FIMI attributed the decline to poor mining activity resulting in lower availability of the mineral coupled with the hefty export duty levied by the government in order to discourage exports.

Mr Sharma said that “The export duty of 30% on iron ore fines is a deterrent to the effective functioning of the Indian mining industry. During our recent interaction with the ministry of finance we requested the government to reduce export duty on iron ore fines in Budget 2013 to 14 to 5%.”

In FY10 the ministry of finance had imposed 5% duty on the export of iron ore fines. This was raised to 20% in FY11 and 30% in FY12. Between February 2010 and March 2012 the railways increased freight 9 times. Today it is about 4 times the domestic freight for iron ore. Fimi said as a result of these factors iron ore exports have turned unviable.

Also the government suddenly woke up to preserve the national resource for use in the domestic market. This led to the tracking of illegal miners and exporters in the 3 leading producing states Karnataka, Goa and Odisha. While mining activity in Karnataka came to a standstill 2 years ago following the Supreme Court order to crack the whip on illegal mining cancellation of environment clearance and nonrenewal of the expired Ones prevented mining in over 100 mines in Goa which contributed around 50% of iron ore exports in 2009-10.