LOCAL protests have forced an Indian state to halt acquiring land for a proposed $12bn (£7.41bn) steel plant to be built by South Korea’s POSCO, further delaying the biggest foreign direct investment in Asia’s third largest economy.
The project by POSCO, the world’s third biggest steel company, is the most high-profile of numerous industrial plans delayed because of protests over land, which analysts warn could hurt economic growth and worsen a current account deficit.
“It has been halted indefinitely…it is because of the so-called protests,” said SK Chaudhuri, the top official in the district where the land is being acquired in Orissa.
“We are waiting for further instructions from the (state) government,” he told reporters.
Thousands of villagers have protested against the Orissa state taking over land for the POSCO plant, with women and children forming human rings around the site this month after the project received final clearances from the environment ministry.
It is most likely that the government in Orissa will try to negotiate with protesters and offer better terms for their land.
POSCO’s India vice president, Vikas Saran, said he had not been told of the decision by the state, while a Seoul-based spokesman for the firm said the project would go ahead.
“There is no change in our stance on the project. We will proceed with the project,” the spokesman said, adding that it expected the Orissa government to continue talks with residents over land acquisition. POSCO is free to start work on the 2,000 acres of land it already has.
As its economy slows on a combination of high inflation and interest rates, policy paralysis and global uncertainty, India has never in two decades so needed foreign direct investment.
The plant was to have come on stream in 2011, but Orissa’s government has only just started acquiring the land. POSCO needs 4,000 acres (1,600 hectares) for the mill, which will initially produce four million tonnes of steel a year.
For the past six years the project has been bogged down by protests, environmental concerns and inquiries into alleged illegalities at a related mining concession. Green clearance from the environment ministry in New Delhi only came in January.
POSCO is the only one of numerous high profile projects that have been held up on protests. ArcelorMittal and Tata Steel too have faced similar delays.
