"We have not proposed any cap on iron ore exports, exports would be freely allowed," Ola told reporters after the GoM meeting.

The draft policy will now come up before the cabinet for approval.

The new mining policy is expected to ease rules governing the surveying, prospecting and leasing of mines, including to foreign firms.

Domestic steelmakers have long been demanding ore exports be capped at around 2006 levels to safeguard supplies for local mills.

A larger share of India ''s iron ore exports goes to China.

While the government imposed an export duty on all ores in this year''s union budget, and then partially rolled it back, the move had failed to deter overseas sales.

However, the recent rise in the value of the rupee and the duty had combined to drag down exports, preventing Indian miners from making the most of soaring Chinese demand.

The government initially set an export duty of Rs300 ($7.40) per tonne of all iron ores, but later cut the rate applicable to low-grade sales to Rs50 following protests by the mining industry. Eighty per cent of the country''s iron ore exports are of low-grade fines.

India''s iron ore exports had in April-May this year dropped by two per cent to 16.41 million tonnes from 16.75 million tonnes in the same period last year, despite China ''s roaring appetite for iron ore, according to the association of mineral industries.

But with the ministerial group not proposing a cap on such sales, no change is expected soon, industry officials say.

The rising rupee has robbed India of a major competitive edge, the trade says, reducing its geographical freight advantage over rivals like Brazil for exports to China.

In 2006-07, India ''s iron ore exports are estimated at about 90 million tonnes, more than half of which will go to China. India is the third-largest supplier of iron ore to China after Australia and Brazil.

Also, the new mining policy is expected to allow increased access for foreign companies for exploring mineral wealth in the country.

Last July, a committee had recommended changes to make it easier to grant permits for surveying, prospecting and leasing of mines, including foreign firms.

Only 10 per cent of India ''s land mass has been explored for its mineral wealth, and industry officials say this is largely due to the mounds of paperwork involved and bureaucratic delays.

Overseas prospecting companies rarely come to India because they cannot sell the data they map, and can only utilise the information if they mine themselves.