With the Rupee hitting new lows day after day in the month of July, the Indian Government and the RBI went all out to defend the rupee by increasing the foreign currency inflows and reducing the outflows
In case, the restrictions on the gold imports and out went restrictions on FDI in a lot of industries, All in the name of getting more foreign currency flows to balance out the Outflow of FII money and to balance the enormous current account deficit. So FDI is now welcome in Airlines, in Single brand retail, In defence etc etc.
But not in mining. In mining, the story is slightly different. Firstly, Arcelor Mittal announces it is shelving its Orissa Steel project. this follows other projects such as Posco which have been shelved/frozen etc. Secondly, the Indian steel minister leads a delegation to Canada seeking Iron Ore supplies and Assets. So essentially, while the finance ministry and the Prime ministers office is struggling for ways and means to attract foreign Investment into Indian Industry and in encouraging Exports to earn foreign exchange and to discourage imports to reduce foreign exchange outflow, the Steel minister is out and about attempting to encourage outbound FDI and Encourage the outflow of foreign exchange. After lobbying for a large Export duty on iron ore (to subsidise the domestic steel lobbies), and publicly opposing any signs from Indian Government to export iron ore (and earn some valuable foreign exchange), the Steel minister wants India to finance the creation of Jobs in Canada and to shelve out of billions of Dollars of investment into Canadian Iron ore mining companies for the benefit of private steel players in India.
It is more ironical because India has the 4th Largest resources of Iron ore in the world. A whopping 25 billion tonnes of it which would last for decades and may be even centuries depending upon how much more we keep finding. India used to export over 100 mt in the past years, capable of earning over $10 billion in Foreign Currency each year consistently from Iron ore exports alone. An Industry which is now in Shambles due to arcane laws, judicial activism, a clueless mining industry which cant figure out stake holder management and a short sighted (and seemingly driven by vested interest) "Steel" ministry.
One wonders if maybe next time, We should just send the transcripts of the PMO and Finance Ministers speeches on Foreign exchange rate to the Steel minister.
