NEW DELHI (Commodity Online): In a new move the Indian government wants a new policy on iron ore which will make India from an exporting country into one shipping value-added items.

In this direction, the ministry will raise the tax on ore export. Steel minister Virbhadra Singh told a newspaper that India is a major producer of iron ore, much of which the country exports at low prices. India should work towards a policy of encouraging value-added exports which fetch the country better revenues.

So, the ministry wants to increase the tax on iron ore export from the current low of 5 per cent. The minister, however, refused to set a target tax.

Brazil, the other major producer of high-grade iron ore, had recently said it was considering imposing a tax on export.

Last year, Indian officials had demanded a hefty lump sum tax on iron ore fines and a 15 per cent ad valorem duty on iron lump export. Ministry officials argue that India should follow a policy similar to that of China, which does not allow the export of high quality coking coal.

According to officials, the government should gradually phase out the export of high-grade ore, which should be reserved for domestic steel makers.

Steel makers support the ministry’s argument as they need more ore to expand their capacity to 85 million tonnes by 2011.

Iron ore miners, on the other hand, have come out with figures to prove that the reserves in India are sufficient to meet the demands of the steel industry as well as the overseas market.

Experts, both within and outside the government, however, feel that India needs to revise its export policy for raw materials.

India’s per head steel consumption is about 35kg, which is expected to increase to 300 kg by 2020. Policy-makers say any long-term strategy should take future consumption into account.

India produces 155 million tonnes of iron ore annually, of which 89mt is exported, mostly to China.