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Foreign investors spooked? India urged to clarify mining position in wake of iron ore scandal

Sunday’s resignation of a state-level Indian politician brought down by a fraud scandal related to iron ore exports is likely to shake the confidence of foreign investors in Canada, says a top Indo-Canadian banker.

Hari Panday, founder of the ICICI Bank in Canada, urged the Indian government to explain its mining policies to Canada — the “mining guru of world” — as well as to important mining jurisdictions Australia and South Africa.

Last year, 70 percent of the world’s mining funds were raised here at the Toronto Stock Exchange.  India should issue a white paper at this mining centre of the world to tell global players about their mining policies. Carry out road shows across Canada to woo investors, professionals, regulators and stock exchanges which are clueless about Indian policies,”  Panday who is currently president & CEO of Toronto-based PanVest Capital Corporation which promotes two-way investments between India and Canada, told IANS, reported the Deccan Herald.

Panday also criticized Indian rules that make it difficult for Indian companies trying to raise money abroad, says the story:

“Currently, any Indian company wishing to list on the Toronto stock exchange should be first listed on the Bombay Stock Exchange. Worse still, the BSE is not even an accredited exchange at the Toronto stock exchange. It means if Canadian investors buy and sell Indian equities, their capital gain is hundred percent taxable. This is not the way do business,” Panday said.

B.S. Yeddyurappa, head of the Hindu nationalist Bharatiya Janata Party government in Karnataka, resigned on Sunday after he was accused of being at the centre of a $3.6 billion mining fraud.

A damning 8000-page report by the Lokayukta, the Karnataka state ombudsman, named a slew of politicians, mostly from the BJP party, as participants  in the illegal plunder of the Indian state’s iron ore resources over a decade.

Lokayukta investigations found that as much as 694,000 metric tonnes of iron ore worth $40 million was illegally exported between April 2009 and March 2010 from the Belikeri port alone by a company called ILC Industries. This company has been named as a front company for the BJP’s Bellary leadership.

Karnataka banned shipments of iron ore from 10 ports and stopped its transport to other ports for exports as a measure against illegal mining and the need to preserve the raw material for local steelmakers. The Indian Supreme Court lifted the ban  in April, but reinstated it last week on concerns of environmental degradation in the district of Bellary, according to

Karnataka exports about a quarter of India’s iron ore.  India is the No. 3 supplier in the world behind Australia and Brazil.