INDIA: Indian Activists' Rising Clout

India's Supreme Court is poised to decide whether a British

company has the right to mine in a sacred tribal forest, a case that

underlines the complexity of undertaking large-scale industrial projects

here.

The case's hearing by the court reflects the growing clout of activist

groups in India and the bigger role the judiciary is taking in enforcing

the country's environmental rules. Experts say legal challenges could

become a greater hurdle for foreign and local investors as India's

environmental lobbyists work together and gather influence.

Vedanta Alumina Ltd., majority-owned by London-listed metals-and-mining

company Vedanta Resources PLC, wants the right to mine bauxite in the

Niyamgiri hills, in the mineral-rich eastern Indian state of Orissa.

Bauxite is refined to produce alumina, which is then smelted to produce

aluminum. Vedanta already operates an alumina refinery it built adjacent

to the area it wants to mine, part of an $800 million project that also

includes a power plant. The company opened the refinery in March, using

bauxite from elsewhere.

The environmental and social activists who brought the dispute to the high

court allege Vedanta didn't disclose that forest land was needed for the

project and therefore didn't get prior clearance from the Ministry of

Environment and Forests -- a violation of Indian law. A spokesman for

Vedanta Resources denies this but declined to comment further on the case

because it is before the court.

The activists also argue the project will do serious harm to the flora and

fauna of the area, which includes rare orchids, elephants, barking deer

and sloth bears. Vedanta declined to comment.

At a hearing in May, Vedanta argued that bringing mining to the area would

create jobs, said a person who attended. The company also promised to

forest other areas in compensation for the trees lost.

The court is scheduled to hear the Vedanta case tomorrow. Its ruling could

stop the mine project, require Vedanta to find another area to mine or

allow the project to proceed, legal observers say.

The legal battle comes against a backdrop of growing social discontent as

India's economic growth of more than 9% leaves many behind. "India's

much-fêted economic miracle is not only bypassing many of the most

vulnerable communities such as dalits [low-caste Hindus], urban poor and

indigenous groups, but is pushing them off their land, out of their homes

and destroying their livelihoods," says Bratindi Jena, of the

international nongovernmental organization ActionAid, which opposes the

mine.

As a result, foreign companies flocking here to tap into the booming

economy, as well as India's own fast-growing corporate giants, face

increasing grass-roots resistance: Across the country, conflicts have

erupted over projects ranging from mines to supermarkets.

In May, villagers opposed to South Korean company Posco's construction of

a huge steel complex in Orissa seized three employees, assaulted two and

held them briefly. Canada's Alcan Inc. said in April it would withdraw

from a mining-and-refinery venture that had faced years of protests,

though a spokeswoman denies that is the reason it pulled out. Reliance

Retail Ltd., a subsidiary of India's biggest company, Reliance Industries

Ltd., which is investing more than $5 billion in a national supermarket

chain, has had stores attacked, as small traders fear for their

livelihoods in the face of major retail competition.

Amid such opposition, "investors need to be aware of the potential for

litigators to file public-interest litigation in the courts," says Seema

Desai, a London-based India analyst with consultancy Eurasia Group.

[Mine Project]

Projects have seen opposition from a range of sources, from farmers to

social activists to larger nongovernmental organizations. Ms. Desai

predicts that "over time, some of the protesters or litigators will join

hands in more organized ways, in which case it could become a big hurdle

for investors."

Public-interest litigation, similar to class-action lawsuits in the U.S.,

is filed directly to India's Supreme Court because it is considered to be

in the general public interest.

In court, environmentalists are already getting a sympathetic ear, says

Gurdip Singh, a professor specializing in international and environmental

law at the University of Delhi. Judicial activism has led to India

adopting stringent environmental regulations, he says. The judiciary tends

to see the environment as the property of future generations to be

protected, and it treats the right to a healthy environment as a

fundamental human right, Mr. Singh says.

The Supreme Court is "taking a big interest in things like urban planning,

land issues, environmental issues," says Ms. Desai.

In taking on such cases, the Supreme Court is filling a gap left by the

central government, which has been reluctant to strictly enforce

environmental laws, says Anand Prasad, a New Delhi-based partner with

Indian law firm Trilegal.

The Vedanta case centers on a report produced by an expert panel assembled

by the Ministry of Environment and Forests on the direction of the Supreme

Court. The report said use of forest land in an ecologically sensitive

area like the Niyamgiri hills shouldn't be permitted. It suggested

environmental clearance for the refinery should be revoked until an

alternative mine site has been identified, and said that if the plans had

been properly reviewed at the outset, the project would have likely been

abandoned.

The refinery was completed and began operating after the report was

issued. Vedanta Resources declined to comment on the report.

• 104 Globalization
• 116 Human Rights
• 183 Environment
• 189 Retail & Mega-Stores
• 204 Manufacturing