The cabinet, which met on Tuesday, also approved amendment in the Consumer Protection Act (Copra), 1986, extended the tenure of the Nanavati Commission of Inquiry in the anti-Sikh riots and cleared the signing of an agreement on plant health with the United Mexican States.

The cabinet also approved the repeal of the Sugar cane Cess (Validation) Act, 1961 and increased the amount of single money order limit with Nepal and Malta.

Briefing newspersons after the cabinet decisions, information technology minister Pramod Mahajan said: "The permission for enhancement of equity participation by MMTC has been given because the earlier participants, Lucky Goldstar International Corporation of South Korea, expressed inability to invest in the project."

Further, the Commonwealth Development Corporation, UK has also withdrawn from the project.

This sudden and unexpected withdrawal has created an equity gap of Rs 130 crore which will be met partly by the IDBI and partly by MMTC, he said. MMTC will invest from its own resources.

Neelanchal Ispat Nigal Ltd is an integrated steel plant which is being set up for the manufacture of 1.1 million tonne per annum in Jajpur districtin Orissa. The proposed cost of the project is Rs 1,500 crore, Mr Mahajan said.