Prime Minister Narendra Modi’s hopes for mobilising foreign direct investments (FDIs) for bolstering growth and job creation may meet with the first casualty if the South Korean steel major POSCO takes a firm stand on withdrawing from its proposed project in Odisha. The main reason for this sorry episode would be not providing mining lease on out-of-turn basis in the spirit of the Bilateral Investment Promotion and Protection Agreement signed between the two countries way in 1996.
South Korean investments in India surged after signing of this agreement and touched $ 3.8 billion by December 2014. South Korean companies forayed into India much before the Make in India programme was officially launched by PM Modi. South Korean companies sources large parts of local contentment, thereby facilitating indigenisation.
From its manufacturing base in Chennai, Hyundai Motor India has exported about 2.2 million cars to 123 countries in five continents. Its success story is that with a total investment of $2.7 billion, its yearly turnover is about $5 billion and it has created about 1,50,000 direct and indirect employment including dealers and vendors.
India urged Hyundai to set up another manufacturing base in the country. Apart from Hyundai Motors, LG, Hyosung, KC Cottrell, R-Land, Shop CJ, Mirae Asset, Samsung are among over 649 others are present in India covering various sectors like automobiles, power and industrial systems, refrigerating and air control equipment, apparel, home shopping, asset management. Some of these companies are household names in India.
What is the problem in getting mining lease? It is the Mines and Minerals Development and Regulation (Amendment) Act recently passed by Parliament that mandate only auction route for getting mines on lease. Modi government has insisted that bidding process should be transparent to avoid and irregularities. POSCO has been old to join the bidding process.
But PM Modi needs to find a way out to give mining release to POSCO on out-of-turn basis. In his recent visit to South Korea he has said: “We will establish a channel – Korea Plus – to facilitate their investment and operations in India.” Will this Korea Plus channel help POSCO in getting mining lease?
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