In a nasty twist to the FDI-friendly announcements that the government made, there was a withdrawal of $12 billion in proposed foreign direct investment a day later. South Korean steel giant Posco junked its Karnataka steel project while ArcelorMittal withdrew from Orissa. In both cases the issues were land and protests from locals. Though the Orissa chief minister has said ArcelorMittal was never serious, the company said it had already invested a lot of money in the project.
Currently London-based Anil Agarwal of Vedanta Resources is facing rejection for his bauxite mining project in Orissa and in Tamil Nadu Great Eastern Energy Corp. is facing opposition to its coal-bed methane project on grounds of ground water depletion and environment pollution.
All these are ominous reminders of the issues that have yet to be resolved before the government thinks of inviting FDI in certain sectors. Perhaps until the government is able to arrive at a land policy acceptable to all stakeholders it should concentrate on attracting FDI in areas where contentious and sensitive issues like land and environmental pollution are not involved. For instance in manufacturing FDI is needed in high-tech areas like electronics, machinery, defence and high-value chemicals where India is a huge importer.