Fears about availability of key raw materials are understandable in a resource-intensive economy like India. Iron ore, oil and other minerals are important for the country’s future.
What, however, is not understandable is the manner in which the government is trying to secure these materials, domestically at least.
Reports indicate the steel ministry may demand an increase in the export duty on iron ore from the current 20% to 30%. This is nothing but iron ore mercantilism.
Iron ore exports and a boom fuelled by them have created problems in states such as Karnataka. There are other remedies to sort out those issues.
A tax to discourage exports, however, can lead to problems. Other countries may resort to similar steps and prevent India from gaining access to other materials. This is not far-fetched. Raising export barriers needs careful evaluation and should not be taken in a hasty manner.