Mittal Steel Co., the world’s largest steel maker, has put in a proposal to build a 12-million-tonne steel plant in eastern India for $11.4 billion, a government source told media on Tuesday.

Foreign companies are looking to set up plants in India, drawn by robust demand in Asia’s third-largest economy expected to expand 7 per cent this year after averaging 7.7 per cent growth in the past two years.

Steel making and mining firms have also warmed to India’s steel industry due to its affordable labour and the world’s third-largest deposits of coal and iron ore.

The source said Mittal Steel had submitted a draft memorandum to the local government in the mineral-rich state of Jharkhand.

Mittal officials were not immediately available for comment, but in July Chairman Lakshmi Mittal had said his company was hopeful of signing a deal with the Jharkhand government in two weeks.

Local media reported an agreement was delayed because Mittal Steel had insisted on exporting part of the iron ore, from the mining rights the firm would be given for the venture.

Jharkhand’s top bureaucrat, Chief Secretary P.P. Sharma, said the government would not allow exports of iron ore.

“We want value addition to happen locally and we have made it very clear to all prospective investors,” he said.

“We may consider Mittal’s proposal to export ore only if it had a better alternative,” the official said, adding Mittal could be asked for better technology to use iron ore fines for steel making as against conventional lumps.

Jharkhand, with estimated iron ore reserves of 3.61 billion tonnes, has been flooded with proposals for steel projects from Tata Steel Ltd. , India’s second-largest steel firm, and smaller companies such as Essar Steel Ltd. and Ispat Industries Ltd.