Delays in land acquisition and policy on iron ore mines in India have turned foreign investors sceptic and at stake is billions of dollars of investment.
Union Steel Minister Ram Vilas Paswan led a delegation of steel captains to London and Luxembourg to find the best technological solutions for expansion of steel capacities back home, and returned with a host of problems to be resolved.
Mittal Steel and Corus Steel have expressed serious concerns over the slow progress of steel projects in India and communicated the same to Paswan on his visit to London and Luxembourg.
Government sources confirmed that Corus Steel was considering investments in India but on a cautious footing, given the scenario here. Corus Steel chairman is understood to have told the delegation that India was a good market but with the delays the company could put its money in markets like Brazil.
"They are not ready to hold on to the money for a project which may be inordinately delayed," said a source close to the development.
The message from LN Mittal, chairman and chief executive officer (CEO), Mittal Steel, was along the similar lines. Mittal made it clear that investment was subject to allocation of captive iron ore blocks.
Mittal had a meeting with the steel minister and also met members of the delegation.
The foreign companies also cited the delays in the land acquisition process as a major stumbling block for investments and specifically the delay in the Posco project.
The government sources said that the minister assured the companies that a level-playing field would be created for foreign investors, in terms of allocation of mines. "There would be no bias towards domestic companies," they said.
Paswan had also said that infrastructure--rail, road, port--would be beefed up in the 11th five-year plan.
Foreign investors--Mittal Steel and Posco--were eyeing port-based land for their projects. Iron ore allocation had become a contentious issue for all projects.
According to Hoda committee recommendations on captive mining, steel capacities that are in existence as of July 1, 2006, which do not have captive mines would be given preferential allocation of iron ore mines, fully prospected by public agencies, without the need for going through the auction procedures, as a one-time measure to create a level-playing field between them and the steel plants that have captive mines. The recommendation puts iron ore allocation to foreign companies under a cloud.
There were some positives from the delegation.The visit could pave way for a government to government technological tie-up between India and Luxembourg in the next six months.
