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Howsoever the Posco story may have unfolded subsequently, when it entered India in 2005, its decision to put in $12 billion for an integrated steel project in Orissa was hailed not only as the largest overseas investment that the company was making but also as the largest-ever foreign direct investment India was to receive. Posco was one of South Korea’s leading chaebols, a giant in the global steel industry, and its entry into the core sector of steel opened up the possibility of India becoming an exporter of steel to different parts of the world in the future.
It was good news for India’s foreign policy establishment too. “It was really a cause for celebration for all of us who were tasked with showcasing India as an attractive investment destination to the outside world,” says former MEA secretary, N. Ravi. Subsequent delays, litigation, protests from locals and the whole bureaucratic maze turned that celebration into embarrassment for Indian diplomats and officials while engaging with the outside world. “It became an issue of concern not only with the South Koreans but also for all other foreign investors since at every meeting from 2010 onwards they were keen to know the status of Posco,” Ravi adds.
The cheer is back for the South Block mandarins circa 2014, with the government announcing that it had not only reissued the environment clearance certificate for Posco’s steel plant, but it was also trying to work in close coordination with the Orissa state government to clear the other pending issues. “Every time a sticky issue that has been stuck for a long time gets resolved, it has its demonstrative value,” says a senior MEA official.
And what better timing than the visit of the South Korean President Park Geun-hye. Even as she was settling down at the presidential suite in New Delhi’s Maurya Sheraton hotel on January 15, Prime Minister Manmohan Singh was said to be chairing a meeting with close aides to take stock of the Posco project, so that it wouldn’t cast a shadow over the delegation-level talks the two leaders would be holding the following day. After the meeting, the two sides duly issued a joint statement saying they welcomed the progress made on Posco and expressed hope work on it would start early.
Earlier, though, the South Korean diplomats had seemed less enthusiastic about India’s long-overdue gesture, their reaction best described by that indeterminate term: “cautious optimism”. “We have been told the environment clearance will soon be followed with a certificate on forest clearance. But till we get the mining certificate, it makes no sense. After all, Posco is here to make steel, not to build houses,” says one diplomat.
This scepticism aside, policy planners on both sides agreed that India and South Korea had huge potential to give their ‘Strategic Partnership’ real meaning through cooperation in a range of areas. South Korean diplomats listed five such areas: India providing a big market for South Korean goods, being an attractive investment destination, partnership in hi-tech fields like space and information technology, cooperation in defence and the country’s influence in the region and the world. The fact that President Park is here in the first year of her presidency only underlines India’s growing stock as a potential partner for South Korea.
“There is no dispute between us and we are a perfect match for each other,” says a senior Korean diplomat. “As we see it, our relations with India can grow and scale new heights with each passing year.” Posco remains a dangling sword nevertheless, as the diplomat adds, “Between the two sides stands the Posco project and over the years it has gathered huge symbolic value.”
India’s former ambassador to the country, Skand Tayal, agrees. “We should take advantage of the South Korean president’s visit and put in place a mechanism where we have regular visits and engagements at the highest political level,” he says. However, he cites another reason why it is necessary for India to find an early resolution to the Posco affair. “The Koreans have been here for a while and they understand how the system works here. But the long delay for such an important project does not send a very good signal to other potential foreign investors,” adds Tayal.