The South Korean government is backing the $12-billion Posco steel plant project in Orissa despite the adverse reports from the Indian government committee that puts question mark on its fate.
The project is on steam and the Korean government is willing to wait, said the source. ?Seoul understands the government of India?s need to ensure the correct procedure?, he said, declining to be identified. Because of the sensitivity of the issues that involve Posco acquiring about 4,000 acre in Orissa to run the 12 million tonne project, no one in the South Korean government or the Indian government was willing to go on record on the project.
On Thursday, Prime Minister Manmohan Singh met the South Korean Prime Minister Kim Hwang Sik at the inaugural summit, the prospect of any discussion on the issue is considered slim, said sources.
An analyst exclaimed that Posco has head room as of now to divert the finances for the project, which had already attained financial closure to its other India based project, like the one in Karnataka.
Korea and India have deepened their economic ties in the past few years with big ticket investment like the Tata buy out of Daewoo and of Ssanyong by Mahindra. The total inward investment into South Korea from India is more than $ 1 billion said the Indian ambassador to Korea, Skanda R Tayal. Korean companies have made deep inroads, especially into the fast moving consumer goods categories.
But the Posco project has become an embarrassment in the relations. All its approvals incldiung those for forest and coastal zone were rejected as deficient by a ministry of environment and forests committee under Meena Gupta, by a majority opinion. However, the chairman herself dissented. That position has been upheld by the forest advisory committee too.