The revalidation of the South Korean firm's lapsed environmental clearance comes days before the country's president, Park Geun-hye, visits India for four days starting Jan. 15.
The proposed 12 million-tonnes-per-year plant in eastern Odisha state has been stuck for more than eight years due to delays in getting various clearances and acquiring land.
The company is hopeful Park's visit will speed up the project - India's biggest foreign direct investment.
"Though an additional burden has been put on us, we are happy with the revalidation" POSCO-India spokesman IG Lee told Reuters on Thursday. "It means the removal of a hurdle for us."
The company will have to spend 5 percent of the total investment on "enterprise social commitments", Lee said, adding it was not immediately clear what that would entail. The ministry could not be contacted outside regular business hours.
POSCO could also hear some good news on its request for a licence to explore iron ore. Odisha will reply within a "day or two" to the federal mines ministry on granting an iron ore exploration licence to POSCO, the state's mines director Deepak Kumar Mohanty told Reuters.
Reuters reported in July that the mines ministry was in favour of giving a licence to POSCO, which plans to use locally mined iron ore for the steel plant.
POSCO first signed an agreement with Odisha in June 2005 to set up the steel plant on 4,004 acres of land.
It has already been allotted about 2,700 acres to begin the project's first stage, which involves setting up two 4-million-tonne plants in two phases. But much of the work can begin only after a nod from India's environmental court, which in May put on hold felling of trees for the project.
The first phase of the plant may be commissioned sometime in 2018, POSCO officials have said.