The Hindu Business Line : Naxalism may deter FDI flow into developmental projects: Report<br>Risk exposure greater in pockets where Naxalites have joined tribals

Industry & Economy - Foreign Direct Investment

Naxalism may deter FDI flow into developmental projects: Report
Risk exposure greater in pockets where Naxalites have joined tribals

Moumita Bakshi Chatterjee

Naxalite movement is going through a defining moment in its existence with its expanding influence and advanced military capabilities such as mobile guerrilla warfare.
Many of the potential investment destinations, particularly for the extractive industry and core infrastructure sectors, are situated in Naxalite-affected areas, making it unviable for commercial operations

New Delhi , Feb. 10

TERMING Naxalism as a grave operational risk affecting investment climate in core extractive sector, a report by risk management consultancy Hill and Associates has cautioned that Naxalite activities could prove to be a major hurdle in attracting foreign direct investment into proposed developmental projects for India's least developed States.

"The risk exposure would be greater in pockets where Naxalites have joined the tribals in opposing project induced human displacement... Areas where industrialisation is in the initial stages of development are more prone to stiff opposition by Naxalites.

The threat may become more pronounced in Orissa, where rapid industrialisation has been set in motion in medium to long term," the report titled - `Growing Naxalite extremism: New challenges for India's internal security and business investments' has stated.

"The recent spate of Naxalite attacks, including the Jehanabad jail break (Bihar), reflected the enhanced military and organisational capabilities of the Naxalite movement. This demonstrates a turning point in its outlook, modus operandi and influence, which has evolved further in the past year-and-a-half," the report said.

Naxalites are currently active in Bihar, Jharkhand, Andhra Pradesh, parts of West Bengal and Uttar Pradesh, Orissa, Chhattisgarh, Madhya Pradesh, and parts of Maharashtra, Kerala and Karnataka, it noted.

It said that the four-decade-old Naxalite aggression has now entered the third and the most advanced stage of warfare.

"Naxalite movement is going through a defining moment in its existence with its expanding influence and advanced military capabilities such as mobile guerrilla warfare," the report pointed out.

The report analyses the implications for internal security and investment climate in the short (up to 12 months), and medium (1-3 years) terms, along with indicative pointers for the long term (3-5 years).

"Many of the potential investment destinations, particularly for the extractive industry and core infrastructure sectors are situated in Naxalite-affected areas, making it unviable for commercial operations. These States are on the verge of development, which can be attributed to the rich mineral resources, changing regional politics and the boom of the Indian economy.

Unfortunately, the ongoing Naxalite activities are acting as major impediments to the overall growth of these least developed States," it added.

Additionally, the report draws attention to the fact that while the Government has traditionally been the main target, the Naxalites are also likely to increasingly target the industry in the future.

"This may not translate so much into `grand' attacks against the industry but crimes like extortion - that go against the ideological grain of the movement - may become more rampant in States such as Bihar and Jharkhand," Mr Ashish Sonal, country manager, Hill and Associates (India) said.

The report further cautioned that the Naxalite threat to the industry, including the MNCs would vary in intensity and manifestation across affected States and regions within these States.

"The threat is likely to grow in part of Andhra Pradesh, Jharkhand and Chhattisgarh, where its manifestation is already high," it pointed out.

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