The Federation of Indian Exports Organization (FIEO) Thursday strongly reacted to China's recent move to impose a ban on imports of low grade iron ore to the country.

"Govt is committed to USD 60 billion trade with China in 2010. This was decided by the Prime Ministers of  India and China. So, in order to reach that goal, China should not stop import of the iron ore," FIEO President A Sakthivel told SME Times over telephone.

"Iron ore has been a very major item of export basket of India to China," he added.

Recently, China Chamber of Commerce of Metals Minerals & Chemicals Importers & Exporters (CCCMC) had banned its members from importing ores with less than 60 percent iron content. The ban applied to trading firms only and not to steel mills and their licensed agents.

The ban came into effect after the China Iron and Steel Association (CISA) advised ore buyers at a conference to stop buying low grade ores.

According to industry sources, although the ban has not yet caused much uproar, it will certainly have a negative effect because India exports majority of its iron ore to China, which is the world's biggest importer of iron ore, and about 50 percent of these exports are low grade iron ore.

In the last few months, China has steadily diversified its imports of iron ore looking for new markets likes South Africa and Canada which have more than doubled their imports of the commodity last year, largely at India's expense.

In 2009, Australia, Brazil and India remained the largest iron ore suppliers to China but imports from India rose only by 18 percent to 110 mt while total iron ore imports to China rose by 41.6 percent year-on-year to touch a record 630 mt. On the other hand, Imports from Australia rose by 42.9 percent to 260 mt, and from Brazil by 41.5 percent to 140 mt.

Expressing concern over the recent move by the Chinese authorities, the FIEO Chief said, "The way we (India and China) are improving our trade relations, this kind of situation should not come. It should be avoided."