Mumbai: China has proposed a long-term agreement with India for importing iron ore to meet its growing demand even as spot prices of the mineral in India are set to rise in line with global trends.

China made the proposal during a meeting between officials from India's Steel Ministry and the Chinese Ministry of Commerce.

China's Baosteel has recently contracted to a 65 per cent hike in the contract price of iron ore to be bought from Brazilian mining giant Companhia Vale do Rio Doce (Vale).

In a regulatory filing, Vale said Baosteel had agreed to a 65  per cent increase for Southern System iron ore fines, and a 71 per cent price hike for higher-quality Carajas iron ore fines. The price increase will go into effect April 1.

Beijing has long-term arrangements with Australia and Brazil and wants to enter into a similar agreement with India.

International iron ore prices on long-term contracts are rising and India steelmakers would also feel the pinch.

"There is going to be an increase in spot prices in India," said Vishambhar Saran, vice-president of Indian Chamber of Commerce and chairman of Visa Steel.

Teel ministry officials said they have not responded to the Chinese proposal. The meeting was also attended by officials of China's top economic planner National Development and Reforms Commission and Sinosteel, largest steel trading company in that country.

India had significant reserves, but it wants to preserve as much as possible. Steel makers in India have for long been demanding reduction in iron ore exports to ensure a secured supply of the mineral.

India is the third largest supplier, after Brazil and Australia, of iron ore to China, the world's largest iron ore consumer. India exports 93 million tonnes of iron ore annually, 85 per cent it to China.

Major miners BHP Billiton and Rio Tinto are expected to secure record increases for iron ore prices this year after Vale, the world's leading supplier, secured hikes of 65 per cent and 71 per cent from leading Asian steel makers.

The annual price-setting talks between the world's leading iron ore producers and their biggest Asian customers have been dragging on for months as the miners lobby hard for major increases to contract prices after a year in which spot prices for the commodity have soared, in some cases by more than 100 per cent.

Nippon Steel of Japan said yesterday that it agreed to a 65 per cent increase to the price it pays for ore from Vale's Itabira mines in Brazil and a 71 per cent jump for higher grade ore from its Carajas complex. JFE, Kobe Steel and Posco of South Korea also signed up to the terms