On January 1 this year, Posco officials in India greeted the first sunrise of 2008 with a clenched-fist salute at Paradip Port, driving all the way from their headquarters in Bhubaneswar for this gesture.

It was what company officials call the 'sunrise spirit' - an indication of Posco's determination to get its biggest foreign investment, the $12-billion integrated steel project in Orissa's Jagatsinghpur district, off the ground as early as possible.

Posco-India, the subsidiary of the South Korean steel giant, is under pressure from its headquarters to start work from the new target date of April this year - it was originally scheduled to begin work in April 2007 - and is now willing to make more concessions to resolve the biggest hurdle in its path: Land acquisition.

Posco-India needs 4,004 acres for its 12-million-tonne steel factory, power plant and captive port but acquisition of land has been stymied for the past two years by stiff resistance from two of the target villages and dissension within the ranks of another group that was initially seen as being friendly towards the foreign venture.

Towards the end of November, clashes between the different factions resulted in a police cordon being thrown around the seven villages. Even today, close to 500 policemen are stationed in the area, billeted in schools and other public institutions. One village, Dhinkia, has barricaded itself, and does not allow any official to visit it.

Posco-India chairman and managing director Soungsik Cho is clearly under strain but says he is hopeful that the land issue will soon be sorted out.

Just approved by the Posco board, the company is offering separate packages for those with land and those without - the agriculture and daily wage labourers who constitute a sizeable proportion of the people who will be displaced by the biggest foreign direct investment in India.

The area is a significant producer of betel leaves, feeding both domestic and export markets, and workers here earn around Rs 100 as daily wages.

The offer, worked out in consultation with the Orissa government, is being kept under wraps till a committee of the villagers agrees to hold talks with the company. But sources close to the development said the terms were more generous than the provisions of the state Relief and Rehabilitation Policy, 2006.

Apart from compensation for land, which under the terms of the policy, can go up to Rs 12 lakh (Rs 1.2 million) per acre, the package includes an unemployment allowance to displaced families till they are provided jobs at the project.

Betel-vine workers will get a percentage of the compensation that landowners will get in addition to a job entitlement card that will guarantee them an unemployment allowance till they are absorbed by Posco.

A senior Orissa government official, who was instrumental in working out the compensation package, said that it could turn into a doubled-edged sword.

"We need to get the Posco project going. Yet, we are afraid that the settlement will set a dangerous precedent for other projects in the state. It may even reopen old cases where companies have resolved their R&R (issues) with project-affected people," he says.

Posco is clearly getting restive. Cho says the board is worried by the delays and has asked him to expedite the project.

Although he maintains that the mood in the project area is now more encouraging, he admits the situation is very tough. "All big projects face problems. But this is tougher than we expected. We did not anticipate this level of resistance."

During a wide-ranging interview with Business Standard, Cho termed the demands made by the United Coordination Committee, the group which was willing to negotiate with the company unlike the Posco Pratirodh Sangarsh Samiti, which is dead set against the project, as "abnormally high".

The committee has sought Rs 25 lakh (Rs 2.5 million) per acre for agricultural land, Rs 40 lakh (Rs 4 million) per acre for their homestead land apart from jobs, monthly allowances to the elderly, and other categories. In addition, they want a 5 per cent share in the company.

"This is just a bargaining position," claims Priyabrata Patnaik, principal secretary in the commerce ministry. He is the government's nodal officer for the Posco project. "We are certain we can work out a deal with the UCC."