ArcelorMittal, the world's largest steel maker, has formally signed an initial agreement to spend 300 billion rupees ($6.4 billion) to build a 6-million-tonne-a-year steel plant in southern India.
The deal, first announced in January, was signed on Thursday at a global investor conference organised by the Karnataka government.
"Once we have seen progress in Karnataka ahead of other (states), we will start here first and then wait and see what is happening in other states," ArcelorMittal Chairman Lakshmi Mittal said.
ArcelorMittal and South Korea's POSCO have faced delays of more than two years to build a total of 37 million tonnes capacity in eastern India due to long time in allocation of mining leases and protests by local farmers against land acquisitions.
Karnataka has iron ore reserves of 3.4 billion tonnes, the second largest in the country, and targets 25 million tonnes of steel production by 2010, up over three-fold from current production, according to the state government.
Steel sales have been rising at near double-digit rates in India, driven by demand from the infrastructure and automotive segments, pushing prices higher.
"The country needs more steel, and we need to participate in this growth," Mittal said.
{{/usCountry}}"The country needs more steel, and we need to participate in this growth," Mittal said.
{{/usCountry}}About 400 investors signed memorandums of understanding with the state government for a combined investment of 3.5 trillion rupees, including by outsourcers Infosys Technologies.