The highlands of Chhattisgarh are in flames. Those flames of Naxal violence threaten to spread from the Bastar tableland to singe India?s biggest sponge iron, cement and steel complex that sprawl just below the hills, from Raipur, the state capital, to Korba in the north.

The state administration is scampering to get its act together. The official writ is visible in only parts of the five districts of Bastar that too in sectors where the Naxals see no threat and have no use for. Chief secretary of Chhattisgarh P Joy Oommen told FE that his officers in Bastar were working under immense pressure, but claimed they were still able to deliver the goods on healthcare and even in NREGA, but all away from the key areas controlled by the Naxalites. State records show 32% of Chhattisgarh is affected by Naxalism.

On the only connector to Jagdalpur, the headquarters of Bastar division we saw the collateral impact of this trail of destruction. As an SUV cart wheeled across NH 43 sending three of its occupants to death, the toll, it was obvious was going to mount. The nearest hospital at Bhanpuri, 40 kilometres away, had no ambulance. Some of those ambulances could be financed by industry but the Naxalite presence has put paid to them. The biggest casualty is the planned 5 million tonne per annum Tata Steel plant and a city modelled on Jamshedpur? just next to the Naxal heartland at Lohaniguda, mothballed since 2005.

Cut to the iron ore mine of the Sarda Energy and Minerals at adjacent ore rich Rajnandgaon district, abandoned since 2008, after Naxalites burnt all equipments. Kamal K Sarda, the chairman of the group with an annual turnover of Rs 1,000 crore now buys ore from the market which, he says, has added to the cost of his products by at least 30%.

The state accounts for 27% of the country?s sponge iron and steel and 21% of coal production, among others. No wonder the Naxals see their biggest pickings here. DG of Chhattisgarh Police Vishwa Ranjan admitted police action has had limited success in the core-troubled areas. Describing how the armed cadres have evolved into clear military groups with 36 platoons in the security of the jungles, spanning three of the Bastar districts, he said it was a full-fledged war that was raging in the forests.

His pointman for the Bastar range, TJ Longkumer, IG, said he has information, the Naxals are recruiting aggressively, to upgrade at least three of the platoons into companies.

As we drove further from Dantewada into Naxal territory near Bijapur, through the densest possible forest cover, that perception became clear.

We drew blank stares from the workers converting a dust track into bitumen topped road to Bhairamgarh. The stretch from here to the headquarters of the district, Bijapur is often out of bounds for even the civil administration, says Manoj Kumar Pingua, the divisional commissioner for Bastar. How did they learn the best of military tactics? The DG Police says in the internet age military training information is no longer classified.

Make no mistake, the Naxals are preparing for a long armed struggle and their attack on the Sarda mines has already made it clear to industry where they aim to hit.

In the last week of May this year, these groups warned inhabitants of the ten villages where the Tatas aim to set up the project, of dire consequences if they sold land. Pingua said the threat is the first time the naxalites have openly interfered in the project, just when the state was planning to meet the villagers for another attempt. Till now, the state government has bought 61% of the land for a steel city in India?s zero industry district.

Tata Steel spokesman, Sanjay Chaudhury said his company is willing to wait. ?We know how to work with the people. They have to be satisfied?. But it looks a long haul.

They are not alone. National Mining Development Corporation, a public sector company too has only a board to offer for its 740 hectare steel plant just off Jagdalpur?s municipal limits on the Dantewada road. The naxals make no distinction between the private or the public sector.

The development model of rehabilitation for the displaced with compensation and afforestation is not acceptable to the naxalites, who demand the benefits without the need to bring in industry, said Oommen. Their ability to create trouble has forced even the semi-military Border Roads Organisation, to delay and then partially abandon a crucial 200 kilometer road project, planned as a ring around Dantewada district, after building two thirds of it. As we drove on it, Rina Khangale, the district magistrate of Dantewada district said the state government is completing the rest.

The Naxal threat till now has however not deterred industry from pouring into central Chhattisgarh, especially in the 150 kilometer zone between Raipur and Bilaspur. The chief secretary says he has stopped fresh approvals in these sectors as the state is ?saturated?. Alain Raban, resident director of Vossloh Switch Systems that supplies to Bhilai steel says the naxal presence, admittedly far from the plains, does not bother him. Neither does it for Sumit Banerjee, managing director of ACC Ltd, with a strong base in Chhattisgarh. ?We have been here so long, we are almost part of the tribals?.

None of them have apparently complained about the threat perception from the jungles, says P Ramesh Kumar, secretary, industry for the state government. According to him, the issue has not figured when he sat with them for approvals. This is quite possible, since all of them are eyeing a chance to get on board the mining based manufacturing complex, at the cost of their competitor, and are therefore willing to make peace with the naxals. The civil administration too tied up with immediate priorities like clearing projects held up with the ministry of environment and forests has acquiesced in letting the naxal ring of fire draw closer.

?Tomorrow: The roads of Naxal areas