India's environment ministry on Monday approved plans by South Korea's POSCO to build a $12 billion steel mill, a boost for the foreign investment climate in Asia's third-largest economy after several setbacks for big ticket industrial projects.
The long-delayed clearance for India's biggest foreign direct investment (FDI) follows a year in which Environment Minister Jairam Ramesh has blocked several projects, drawing criticism that he was jeopardising India's growth story.
India, one of the world's fastest growing major economies, needs foreign capital to boost infrastructure and allow its economy to grow at near double digits. But projects have met with protests from largely poor farmers in this densely populated country. "It's very good news that this issue has now been settled," said Taina Erajuuri, Helsinki-based portfolio manager at FIM India, which owns about $150 million worth of Indian shares.
"India, unlike China, is a very difficult country for foreign companies to get approvals, specially environmental approvals. Many foreign companies want to come to India but the country is very bureaucratic, to put it mildly." The speed at which projects are approved are unlikely to change any time soon but Ramesh's push to adhere to existing environmental rules and regulations should give more clarity and transparency to investors, experts say.
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