Indian investment moves marred by steel pullouts

Indian investment moves marred by steel pullouts

MUMBAI - India may be trying to lure foreign investors to revive its ailing economy, but the axing of two mega steel projects underlines obstacles even industry giants face, analysts say.

Prime Minister Manmohan Singh and top ministers agreed last week to relax foreign investment rules in a bid to woo investors and boost sluggish economic growth.

"More FDI (foreign direct investment) reforms are on the anvil," Singh told an audience of industry leaders in New Delhi on Friday.

Among the more eye-catching reforms trumpeted three days earlier were the removal of the FDI cap in telecoms and the loosening of rules in the defence sector for overseas players.

But the announcement came the day that the South Korean giant Posco said it was pulling out of a $5.3 billion deal to build a steel plant in the southern Karnataka state, citing problems in obtaining mining rights and vociferous opposition from local residents.

The following day, the world's largest steel maker, ArcelorMittal, said it had scrapped plans to build a plant in the eastern state of Orissa due to delays in acquiring land.

The Posco plant had been due to produce six million tonnes of steel per year, with ArcelorMittal planning double the amount.

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