Although entrepreneurs are free to select the location for setting up businesses in India, the establishment of a company still remains subject to zoning, to land use regulations at the state level, and to environmental regulations at the central level, which leads to restrictive investment environment. Recently, it seems that it is increasingly difficult for foreign investors to invest in India due to excessive environmental regulations. For example, Korea's POSCO has been struggling to start a steelworks project in Orissa for six years. The company has been faced with the lack of regulatory clarity between the Central Government and States as well as strict environmental regulatory restrictions. It also has difficulty in purchasing land because of residents' opposition. Could India take appropriate measures to address these issues in a timely manner?
Reply: The requirement for obtaining a clearance for undertaking a non forest activity in a forest area is mandated under Forest Conservation Act, 1980. This requirement applies to all project proponents whether state/central government departments or state/central PSUs or Indian companies or foreign companies. The environment clearance is mandated by EIA Notification under Environment Protection Act, 1986 and is similarly applicable to all kinds of project proponents. These requirements are national in nature in light of the Indian circumstances. The case of POSCO was dealt under the existing rules/regulations at par with other project proponents under similar circumstances.
