About four years ago, 13 protesters were killed in police firing at the Sterlite Copper Thoothukudi plant in Tamil Nadu, which eventually led to the closure of its smelter plant. On Thursday, the company’s chief operating officer A. Sumati told reporters in Chennai that “external forces with vested interests” were behind the incident, accusing them of disrupting the economy of the state and the country.
Controversy and Sterlite Copper go hand in hand. The smelter project came to Tamil Nadu more than two decades ago when two states – Maharashtra and Goa – refused permission. Successive governments, both in the state and at the Centre, facilitated continued operation of the plant despite complaints of environmental pollution, until the then AIADMK government shut it down following the deaths of protesters opposing the plant’s expansion plan. The company has challenged the bandh and the matter is in the Supreme Court.
Was a more calibrated approach available to the Tamil Nadu government rather than the extreme step of shutting down the plant? The plant’s closure orders were not in response to allegations that it was highly polluting; It was the firing incident that caught the hand of the forced government. While Sterlite’s pollution charges cannot be taken lightly, the costly impact of plant closure cannot be ruled out.
The dependence of a large economy on copper cannot be overestimated. Copper is used in electrical wiring, which means that every home, factory and office is affected when production volumes fluctuate rapidly. As a result of the closure of the Sterlite plant, copper production in the country fell from 830,000 tonnes in 2017-18 to 410,000 tonnes in 2019-20, Union Minister for Mines, Coal and Parliamentary Affairs Pralhad Joshi informed the Lok Sabha in March 2021. Imports of refined copper more than tripled, exports fell by more than 90%. From a net exporter of 334,310 tonnes in 2017-18, India became a net importer of 44,373 tonnes in 2019-20.
Episodes of knee-jerk reactions to controversies involving allegations of infringement by corporations go beyond standard complaints of ease of doing business in India – rather discomfort. They go to the heart of state-capital relations in India. The most unfortunate of such cases involved Chief Minister Mamata Banerjee in West Bengal, who, while in opposition, forced Tata Motors’ Nano project out of the state. In Andhra Pradesh, after the election victory, Chief Minister Jagan Reddy canceled the contracts awarded by his predecessor for the construction of a new capital.
The Indian state, both at the central and federal levels, does not indulge itself in glory when it is necessary to balance conflicting objectives. This creates a loss-making situation where environmental and worker interests as well as the economy suffer.
Yes; India needs zero tolerance for companies showing little respect for employees and the environment. Yet, sudden plant shutdowns sour business sentiment at a time when there is already a severe crisis of industrial jobs that are not keeping pace with the growth of the labor force. Harsh penalties and strictures can force polluting industries to follow rules on environment, sustainability and labor. But if the corporate sector is to become more sensitive to the environment and workers, the state also has to be careful to ensure that officials do not recreate Inspector Raj, leading to crony capitalism and corruption.
In the case of Sterlite Copper, its geographical location also raises strategic and security concerns. Sumati’s statement, whether based on substantial facts or not, gives the Stalin government an opportunity to take a fresh look at the controversy and repair Tamil Nadu’s industrial climate.
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