SEOUL -- Steel giant Posco (IW 1000/68) said Tuesday it would scrap a $5.3 billion deal to build a steel plant in India because of delays and local opposition.
The company said that it would drop the project in India's southwest Karnataka state after failing to secure land and infrastructure due to opposition by residents.
Posco, the world's fourth-largest steelmaker by output, signed an initial agreement in June 2010 to push ahead with the project.
But its decision to scrap the deal was seen as a blow to India's efforts to attract foreign investors.
Posco has been involved in a separate $12 billion steel plant project in India's Orissa state.
In March, a bomb explosion in a village in Orissa state killed three people involved in protests against the project. The village has been the epicentereof protests since Posco signed a pact with the state government in 2005 for the plant.
Local residents say the planned steel mill -- touted as India's biggest single foreign direct investment -- would interfere with their traditional forest-based livelihoods and uproot them from their homes.
The Posco deal in Orissa state has been watched as a test case by foreign investors eager to enter India's fast-growing economy but wary of the potential for environmental and other concerns to derail their plans.
Copyright Agence France Presse, 2013