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The Centre on Thursday rejected demand for ban on iron ore export, but said states need to take stringent steps to prevent illegal mining.
"Merely because state governments are not able to prevent and stop illegal mining, we should not ban export of iron ore," Mines Minister B K Handique said while replying to a debate on illegal mining in the Rajya Sabha.
The problem of illegal mining, which is growing in alarming proportions in Karnataka, Andhra Pradesh, Orissa and Jharkhand, is a problem of governance, he said.
"Rather banning export of iron ore, we need to see there is no illegal production of iron ore," the minister said, adding that the need of the hour is to tighten the regulatory system with adequate staff.
The minister also clarified that Karnataka, which is the second largest producer of iron ore in the country, has not banned export of iron ore.
"Karnataka has prohibited transportation of iron ore to ports and not export as such," he said.
Iron ore is a vital steel making raw material. India, the world's third largest iron ore exporter, produced 218 million tonnes of iron ore in 2009-10 fiscal and exported 128 million tonnes.
Participating in the debate, Leader of the Opposition Arun Jaitley said illegal mining is done by those who have legitimate permission for lawful mining.
"On account of illegal mining there is large scale tax evasion," he said.
He suggested that mines should be allotted to those who are actual users. It is necessary to link the allotment of mines and minerals to the manufacturers rather than mere traders, he added.
Jaitley further said the government must allow volumes to be mined that is required in the country and leave adequate resource for the future generations.
Pointing royalty and revenue to the state and central governments are dismal, he said, "There is a need to review and increase the volume of these taxes."
On demands from members to increase royalty on iron ore, Handique said the rate of royalty is revised every three years and promised to have a relook at the matter.
Royalty rate on iron ore was revised to Rs 125 per tonne in 2009 from Rs 21 a tonne as a result state saw massive increase in royalty collection from Rs 250 crore in 2008-09 to Rs 4050 crore in 2009-10.
On nationalisation of mines to check illegal mining, the minister said there are practical difficulties to nationalize the country's mineral resources.
"Nationalisation itself cannot put an end to illegal mining. There are practical difficulties," he said.
On demands for CBI enquiry into illegal mining Orissa, he said the power for such probe rests with the state governments and 'the Union government cannot unilaterally do it.'
However, if the Orissa high court gives instructions, the Centre is ready for it, he said, adding that the Centre has also set up a Commission of Enquiry to deal with cases related to illegal mining besides the Indian Bureau of Mines is developing a technique of mapping of the mineral area.
Handique expressed the hope that the Mines and Minerals Development and Regulation Act 2010 will tackle the problem of illegal mining and ensure holistic approach in grant of mineral licenses.