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POSCO's misadventure in Odisha comes to an end!
It is curtains for what was often pitched as the single largest foreign direct investment in India, the South Korea-based Pohang Steel Company's (POSCO) integrated steel plant in India that never came to fruition. In Rajya Sabha, on 4th May 2016, the then Steel and Mines Minister Mr. Narendra Singh Tomar said the government of India had no information on POSCO matter.

After a decade of protests, litigation and stymied plans POSCO has withdrawn from its ambitious India foray in Odisha. This admission of withdrawal was made public recently in the ongoing case that the company has in the National Green Tribunal. POSCO clarified that it was not going to pursue plans for the steel plant and associated infrastructure in Odisha further.

First announced in 2005, the Odisha steel plant by POSCO was unable to make headway for the next ten years due to delayed environment clearances, challenges of land acquisition and determined protests by local communities. However, these were not the only reasons that held up this marquee project.

The POSCO case is symptomatic of the unsavory and often impossible trade-offs that occur in the name of development in India's poorest districts. It also shows why India is a difficult country for foreign investors.

The withdrawal from the fractious site was a long time in the making it seems for POSCO. One major signal came from the fact that the company did not seek fresh approval for a multi-product Special Economic Zone (SEZ) in Jagatsinghpur after the previous approval expired in 2014.

As part of the integrated project, the SEZ was first approved by the Commerce and Industry Ministry under the Union government in October 2006. This allowed the company to set up a SEZ on 1601.6 acres of land. Since the land could not be cleared or acquired, the company could not start its work. The last extension to this approval expired on October 24, 2014. The company did not seek another extension.

The Development Commissioner in the Commerce Ministry recommended cancellation of the approval for POSCO SEZ when faced with an indifferent response from both the Odisha state government and the Industrial Development Corporation of Odisha (IDCO).

The statement of the South Korean Ambassador to India, Cho Hun, on a recent visit to Bhubaneswar also corroborates the view that POSCO had decided a while ago to shelve the project. Hun said that POSCO had not requested the South Korean government for any help over the last year and neither has the issue figured in the bilateral talks between India and South Korea in recent times.

Inordinate delay in land acquisition as well as issues associated with environmental clearance were certainly worrying POSCO. However, they were not the only reasons for pulling the plug on the project with which POSCO persisted for over ten years. Though it might seem that the decision to withdraw is a recent one, the fate of the project was sealed almost a year back.

It seems the final nail in the coffin was the new legislation on auctioning mines enacted in March 2015 by the Union government. While the Odisha government had assured POSCO that it would get the mining lease for free, this new arrangement meant that POSCO would have had to participate in the auction process; and auctions by their nature do not assure certainty either in terms of the acquisition or its cost. In the meantime, the continued depression of the global steel prices added to POSCO's woes. And the viability of Odisha project came under question.

Last year, POSCO's stand was made clear by the India spokesperson, IG Lee, who said, "We will have to see what our costs will be and whether the project will be viable. We will take a final call only after auction details come."

POSCO eventually did not participate in the auctioning process and immediately afterwards cut down the staff signaling its stance. The company had tried to influence the central government through the Odisha government but without much success. According to Odisha's Minister for Steel and Mines, Praffula Mallik, the central government did not agree with the state government's position that a concession should be made for POSCO. The stage was then set for POSCO to decide whether the auction process suited it.

POSCO was considered the largest foreign direct investment proposal in India when the agreement was signed with the government of Odisha in 2005. At that time, the company proposed an aggregate of $12 billion investment in the integrated steel plant along with a port and a multi-product special economic zone. The project got environmental clearance in 2007 and forest clearance in 2010. Land acquisition for the project, however, proved to be a tough task as the local people for whom cultivation of paddy and beetle vines was the mainstay of their livelihood opposed the project.

Meanwhile, the revised environmental clearance that was accorded to the company in 2014 was challenged by Odisha-based green activist, Prafulla Samantaray, in the National Green Tribunal. Rather than defending the project, the Korean company shared its decision to seek cancellation of the clearance with the Tribunal. It cited the issue of land acquisition as the main reason why it was not possible for POSCO to complete the project before 19th July 2017, the deadline implicit in the clearance.

Environment lawyer, Ritwick Dutta, says, "POSCO case is a classic example of the hurried manner in which foreign investments are invited into India bypassing statutory laws and procedure. No proper Environment Impact Assessment (EIA) was done. A project worth $12 billion was approved by India's Ministry of Environment and Forest without accounting for the real social and environmental costs of the project. Most shockingly, POSCO proceeded with its plans for setting up the steel plant and port even without any commitment for the iron ore mine. It is clear that POSCO represents the classic example of companies which intend to present a fait accomplisituation to the government. It is clear in the NGT, that the approval to POSCO was based on extraneous factors and that the decision making process was vitiated due to bias.

According to Dutta, the company started felling the trees prior to the grant of formal approval under the provisions of the Forest (Conservation) Act, 1980. The law was allowed to be violated with impunity to favour business interest. The State rather than acting to protect the interest of the people, specially marginalised people, became an agent of the company. It was promoting the interest of the company as 'public interest'."

(To be concluded)

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