Karnataka losing ₹8,000 cr revenue per year: FIMI

Our Bureau Bengaluru | Updated on April 05, 2021

The gross loss over a 5-year period to Karnataka is about ₹30,000 crore, says FIMI   -  K_MURALI_KUMAR

Trade body urges govt to remove of trade barriers imposed due to e-auction mechanism

The Federation of Indian Mineral Industries (FIMI), Southern Region has requested the Karnataka government to file the reply before the Supreme Court at the earliest favouring freedom of trade for iron ore lessees.

“We have sought State government’s help as the strict conditions have weeded out the illegal elements and established robust monitoring systems, perpetuating the requirement for e-auction of iron ore by Monitoring Committee and prohibition on export of iron ore and pellets are causing sustained loss to State exchequer, and hindering development of minerals and socio-economic development of mining areas,” said Santesh Gureddi, Vice-President, FIMI and Chairman FIMI, Southern Region.

“FIMI had also written to the State government seeking its intervention to restore normalcy in Karnataka for ease of doing business in the mining sector.,” he added.

Sharing statistics, Gureddi said the gross loss over a 5-year period to Karnataka is about ₹30,000 crore due to e-auction mechanism with restrictions on sale of iron ore outside the State and exports.

“Incidentally, the suppressed prices are a double whammy since it leads not only to lower royalty and other levies to the State but also reduces the bid premium on ore extracted from recently auctioned captive mines which is over and above the stated loss herein,” explained Gureddi.

Discriminatory Policies

Gureddi added, “It is interesting to note that these discriminatory policies are specific to Karnataka whereas rest of the India (including Goa and Orissa) is allowed to trade freely as per the EXIM policy of the Centre thereby ensuring fair revenue to the State exchequer including foreign exchange.”

Explaining the restrictions, Gureddi said, “The misery of the iron ore industry is, while there are restrictions on the free trade of iron ore, on the other hand steel makers from the State have all the liberty to source iron ore from any other region of the country and even import from other countries in addition to ever increasing captive mines acquired in the past leading to market monopsony.”


Sauvick Mazumdar, CEO, Vedanta Sesa Goa & FIMI member said, “Karnataka’s iron ore industry has the massive potential to drive the growth. The lower price for State ore and restrictions on the trade is also drastically reducing the contribution towards DMF and other community development activities in the State. It is important to bring in suitable policy reforms to enhance the ease of doing business.”

FIMI Southern Region also raised concern over non-utilisation of special funds under DMF and SPV. The iron ore mining fraternity in Karnataka in the past six years has contributed around ₹2,336 crore to DMF Fund and a corpus of around ₹18,000 crore is accumulated under SPV. These funds earmarked for socio-economic development for the community. Appropriate steps should be taken by the State government to use the unutilised funds on development of the infrastructure and livelihood in the mining belts and surrounding districts.

Published on April 05, 2021

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