Hundreds of villagers gather to try to stop Indian steel plant

South Korea¿s Pohang Steel Company has been trying to acquire land for a 1,620-hectare steel plant and port since 2005, in what would be the most expensive foreign investment project in Indian history, but it has faced stiff resistance from farmers and fishermen who refuse to give up their homes and livelihoods.

Villagers and their children lie at the proposed site of a $12bn steel plant by South Korea's Posco during a protest in the eastern Indian state of Orissa. REUTERS / Stringer

RANCHI // After six years of protests against the construction of a US$12 billion (Dh44bn) steel plant in eastern India, a final confrontation is brewing after hundreds of villagers created a human barricade to block the destruction of their homes.

When the police arrived at the outskirts of Dhinkia and Gobindpur villages in the state of Odisha on Saturday, they found about 1,000 women and children lying on the ground, blocking entry to the proposed site.

They joined hundreds of other protesters who have gathered around the disputed villages.

South Korea's Pohang Steel Company (Posco) has been trying to acquire land for a 1,620-hectare steel plant and port since 2005, in what would be the most expensive foreign investment project in Indian history.

But like so many large-scale industrial projects in India at the moment, it has faced stiff resistance from farmers and fishermen who refuse to give up their homes and livelihoods.

"The people are ready to resist," said Prashant Paikray, a spokesman for the protesters. "The police have surrounded the area and are preparing their attack. We have always been a peaceful and democratic movement, but we are ready to fight."

For a while last year, it appeared as if this moment might be avoided. A report commissioned in n October 2010 by the Ministry of Environment and Forests found "serious lapses and illegalities in the EIA [Environmental Impact Assessment] process" and "serious violations in the public hearing process where many communities have been left out."

It argued that at least 3,350 families - about 20,000 people - were dependent on the area for agriculture, despite persistent claims by Posco and the Odisha government that only 400 families would be affected.

Another report by the Forest Advisory Committee said that forest land had been illegally handed over to the project and that the whole process of land acquisition should start again.

Despite a reputation for rigorously enforcing environmental regulations, the environment minister, Jairam Ramesh, largely ignored the reports and gave a green light to the project in January, and it was granted formal approval by the government in May.

Many residents have since accepted compensation and abandoned their homes, but the crucial strongholds of Dhinkia and Gobindpur were always going to be the most difficult part of the process. Villagers have effectively barricaded themselves into the area for the past year, blocking entry by the police, and are reluctant to leave for fear of arrest.

"We are now fighting a last-ditch battle," said Partho Ray, a human rights activist who travelled from West Bengal to join the protesters. "The state government is hell-bent on taking this land and if they really want to exert brute force, nothing will stop them."

The police have been aggressive in this area before. In May 2010, they used teargas and beat people with sticks to demolish a protest camp on the edge of the villages.

As pressure mounts, the protesters have mobilised supporters from across the country to join the human barricade. They have also launched legal challenges in the Odisha High Court seeking a stay order on the project, although huge backlogs in local courts mean this is likely to take a long time.

The Odisha government argues that it has offered an excellent rehabilitation package, including monetary compensation and "a job for every able-bodied person who is willing to work."

Saroj Mahapatra, a former spokesman for Posco, said: "The opposition to the Posco project is not from the really affected people but from outsiders who are using and instigating some of the local people for their vested interests."

This is denied by many in the area, who see little benefit in giving up their fertile agricultural land and fishing areas for the uncertain prospects of employment in a steel mill. "No compromise is possible," Mr Ray said. "The people know that if they give up their crops and their land, they are doomed."

Foreign investors are watching carefully. Disputes over land acquisition have become a serious obstacle to industrial growth in India. The Associated Chambers of Commerce & Industry estimated in 2009 that land disputes had stalled 133 projects worth a total of US$100 billion.

Violent clashes have broken out across the country in recent months. Two farmers and a policeman were killed during protests against a new expressway on the outskirts of Delhi in May. Dozens were injured and one man killed at the site of a proposed nuclear park at Jaitapur in Maharashtra in April, and two people were killed when police fired on opponents of a new thermal plant in Andhra Pradesh in March.

The government has vowed to reform the colonial-era Land Acquisition Act, which has not been updated since 1894 and gives sweeping powers to governments to forcibly acquire land "in the public interest".

But there are sharp differences over the drafting of the bill, which is due before parliament in the coming months. At one extreme is the National Advisory Council, which recently argued that governments should have full control over land acquisition to protect vulnerable communities from rapacious capitalists. At the other is the new chief minister of West Bengal, Mamata Banerjee, who has fought against some of the most controversial land grabs in recent years and says that villagers should be empowered to deal directly with companies to maximise their compensation and bypass corrupt bureaucrats.

A previous attempt to amend the act was abandoned when the last government's term ended in 2009. Combined with recent corruption scandals and India's long-running problems with red tape, this issue has helped cause a sharp drop in foreign direct investment, which fell from US$26 billion in 2009-10 to US$19 billion last year.

While the world waits for the Indian government to signal its long-term intentions on land acquisition, the protesters in coastal Odisha have more pressing concerns.

"We are fighting with our backs to the wall," Mr Ray said. "All we can do is fight day-to-day and prepare for the next. But we can't give up because thousands of people's lives are at stake."