India on Monday gave final clearance to South Korean giant POSCO's proposed $12 billion steel plant in a deal seen as a test of the country's openness to foreign investment. The plant - one of India's biggest foreign projects since the launch of market reforms in 1991 - has faced fierce opposition from locals in eastern Orissa state campaigning to save farmland and forests needed for the project.
The environment ministry, which gave permission for the plant to be built in January, had stipulated that the Orissa government should investigate claims by locals who could be forced off their land. Environment Minister Jairam Ramesh said Orissa authorities had dismissed the claims and therefore "final approval is accorded to the state government" to give 1,253 hectares (3,100 acres) of forest to POSCO.
Under India's federal system, "faith and trust in what the state government says is an essential pillar," Ramesh said, although he noted Orissa's state government had been "actively canvassing" on behalf of the POSCO proposal. Indian law stipulates no forest land can be cleared without the approval of people who stake claim to the land.
The POSCO deal, originally announced in 2005, had been keenly watched as a test case for foreign investors eager to enter the fast-growing Asian economy but wary of the potential for environmental concerns to derail their plans. Giant steelmaker ArcelorMittal, controlled by Indian billionaire Lakshmi Mittal, has also found itself unable to acquire land for a proposed plant in eastern India.
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