Anil Agarwal Vs NGOs - No Sharing of Values

Even though the knives are out, there is danger that an opportunity to bring in investment and prosperity to India's most backward areas might be lost.

Prince Thomas
Published: 19, Dec 2012

Despite the seemingly royal linkages of my first name, I like to see life from the back bench. While studying it helped when lectures were unending but later I realized it also worked as a corporate reporter. It gives a clear view of both the performer and the viewer; of the 360 degree perspective and the minute detail. Now while tracking the world of business for the pages of Forbes India as Senior Assistant Editor, I will use this space to share what I observe from that rear seat.

After a short lull, Vedanta Resources' aluminium project in Orissa is back in the news.

Last week, a small but loud protest was held at the Indian High Commission in London. Open magazine in its latest cover story alleges that "companies like Vedanta are brazenly taking over governance in some parts of India." Earlier this week, Vedanta's owner Anil Agarwal argued in The Economic Times, that the government should open up the mining industry, as this could help add up to $1 trillion to India's GDP.

The reason? The Supreme Court is currently hearing a petition filed by Orissa Mining Corporation (OMC), against the Ministry of Environment and Forests, which has refused permission to develop the contentious Niyamgiri bauxite mines in the state. As per regulations, OMC, a state enterprise, will operate the mines and supply bauxite to Vedanta. The last hearing was held on 5th December and the next is slated to be held in early January. Obviously, much is at stake for Vedanta. The question is, will the public noise sway the Supreme Court in any way?


Here's a bit of background to jog your memory- Vedanta has set up a one million tonne alumina refinery in Orissa's Kalahandi district. But earlier this month it was forced to shut it down because of shortage of bauxite, the primary raw material, despite being promised assured supplies by the state.The Apex Court had given conditional clearance in 2007, to develop the mine, the permission was withdrawn in 2010 by the central government.

The case being heard by Supreme Court is an important one. As Agarwal rightly points out India needs billions of dollars of investment to develop its natural resources. The mining industry has the potential to not only feed the needs of a growing economy but also generate employment in areas that are ranked among the lowest in human development index.While on one hand, governments at the centre and the states are of the opinion that mines should be given only to those who will value-add, Vedanta is still without any raw material despite having invested more than Rs 5,000 crore to set up a refinery. It has accumulated losses of Rs 2,500 crore in the last four years.

At the same time, Open raises serious issues of violation of laws relating to forest and tribal rights. I should note here that the feature itself is not completely convincing, but it will get the benefit of doubt given the past controversies Vedanta has found itself in. In a feature I had written in 2010, I had looked at how controversies have dogged Agarwal's mercurial rise; and that he was attempting to change that perception.

Agarwal obviously needs to ensure that the changes are not just cosmetic. As FSG's Dane Smith and Melissa Scott had said in their blog, India's mining industry needs to adopt Shared Value principles as their CSR  programmes tend to be 'tokenistic' in nature and do not affect meaningful social change at a large scale."

The principle is key to finding a solution that would help bring investment and also take care of local rights. At present though, the noise is drowning everything.


  • Sanjay Negi

    This is a case study of how natural resources of a country should be used... The tribals live on land which has minerals....they do not have title to the land but do not have the skills to survive in a different environment... When Zamindari was abolished after independence, agricultural land titles were transferred to the tiller but forest land titles were not given to tribes living off forests and retained by the state...this needs to be first corrected... India should have an explicit policy that says that it does not want any of its citizens leading a way of life which is dependent upon forests... Tribals should therefore be relocated and rehabilitated on agricultural land which should be bought by government from willing farmers and given to the same time tribals should be given training inputs to live off agriculture instead of the forests...all this rehabilitation to every single tribal must happen at government cost... If the government is unable to buy sufficient agricultural land to be given to tribals, it should build tenements for all the families and give them a pension to lead a secure life... Only after the last tribal has been relocated and rehabilitated should the government take over forest land... Once the government has the forest land in its unequivocal possession, should it address the issue of converting it from forest to industrial use...that should be assessed by an independent environmental body which has international is very important to have international voices on these issues because environment is a global subject and just because a forest falls within a national boundary does not mean that one particular country can deforest that area at will... This law should be adopted by the UN and made mandatory for all countries...

    on Dec 20, 2012
    • Prince Thomas

      Very well said Sanjay. I only wish the decision makers in India have the maturity see the issue in its entirety, which is making development inclusive. Some might argue that the tribals should be left alone with their way of life. How much ever I would like to agree to that, it might not be the most practical of solutions.

      on Dec 21, 2012
  • Niranjan Das

    Now the role of NGOs is questionable.In the name of social development they are instigating the local inocent people and enterfering the industrial development throughout.It is observed that the funds(whereever they get) are being misutilized by way of political funding.The least goes to the real beneficiary and the most goes to the so called NGO persons and politicians.This is causing real social unstability.In india,the role and responsibility of NGOsare to be scrutinized and the funds are to be channelized after income tax department approval.

    on Dec 19, 2012
    • Prince Thomas

      Dear Niranjan, Thanks for your comment. You have raised an important point. In my view, the NGOs can play an important role in creating an ecosystem where interests of all the stakeholders in industrial development are taken care of. In India, while the NGOs have rightly highlighted cases of violations, the problem starts when they take a fundamentalist stance and don't look for constructive engagement that will lead to solutions on the ground. Let me point out that the companies too need to change their approach. The concept of Shared Value is all about that. Thanks.

      on Dec 19, 2012
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