Communities, land and the social licence to operate

Every large project needs land, water or forests, and someone already lives on or uses them. A company can hold every permit and still lose its project if the local community turns against it. Protests can delay construction for years, courts can cancel approvals, and governments can close plants. This informal acceptance from communities is called the social licence to operate.

In India, land is scarce, many people depend directly on land and forests, and the law gives communities real rights. For mining, power, steel, cement, infrastructure and large renewable projects, community relations are often the single biggest source of delay and cost overrun.

India's legal framework

• Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013: requires a social impact assessment for acquisitions, rehabilitation and resettlement for affected families, and the consent of 80% of affected families for private projects and 70% for public-private partnership projects.
• Forest Rights Act, 2006: recognises the rights of forest-dwelling communities. Using forest land for projects needs the forest rights process to be completed, with the gram sabha (village assembly) involved.
• Panchayats (Extension to Scheduled Areas) Act, 1996: gives gram sabhas in Scheduled Areas a say on land and resources.

Free, prior and informed consent (FPIC)

FPIC means communities, especially indigenous and tribal peoples, can agree to or refuse a project, without pressure, before it starts, and with full information. It is a requirement in international standards such as the IFC's Performance Standards for projects affecting indigenous peoples, which many lenders follow.

Two Indian examples

• Niyamgiri, Odisha (2013): the Supreme Court ruled on 18 April 2013 that gram sabhas should decide whether bauxite mining linked to Vedanta's projects in the Niyamgiri hills affected their religious and forest rights. All 12 village assemblies consulted rejected the mining.
• Sterlite Copper, Thoothukudi (2018): after years of complaints about pollution, protests in May 2018 ended in police firing in which 13 people were killed. The plant was closed, and in February 2024 the Supreme Court dismissed Vedanta's plea against the closure, calling the health and welfare of residents of "utmost concern" (see the Sterlite case study).

Signs that a social licence is weak

• Repeated protests, petitions or court cases by local groups.
• Pollution control board notices or tribunal orders.
• Land acquisition well behind schedule.
• Few local hires and little local procurement.
• No working grievance mechanism, or grievances that stay unresolved.

Data sources

• BRSR Principle 8: social impact assessments, rehabilitation and resettlement details, inputs sourced locally, and community grievances.
• BRSR Principle 4: how the company identifies and engages stakeholders.
• Project disclosures, court records and news: often the earliest signals.