Jairam Ramesh, whose push to block projects threatening the environment has put him on a collision course with big business and cabinet colleagues, said he understood the need for industrialisation to create jobs.

"I am not Dr No," Ramesh told a corporate forum, referring to the nickname given to him by critics of his proactive green policies.

"I assured industry today that we will try and see how we can expedite clearances" of projects, he said.

At the same time, he proposed that there should be "fiscal incentives that reward economic performance and that penalise bad environmental performance" by industry and added business must become "more sensitive" to local issues.

Ramesh made headlines by blocking plans by British resource giant Vedanta to mine bauxite in eastern India and has put other major projects on hold, including a new hill station in western India.

While critics have accused him of stalling development, his supporters say he has turned around the image of the environment ministry, previously viewed as a rubber stamp for decisions on industrial policy.

With India's economy expanding at close to nine percent, Ramesh is at a "historic inflection point in terms in making decisions about the country's economic growth and industrial development," said Amit Mitra, secretary general of the Federation of Indian Chambers of Commerce and Industry.

Ramesh said would decide by the end of January the fate of South Korean steelmaker POSCO's plans to build a $12-billion steel mill, hanging in limbo since 2005. It would be India's largest single foreign investment.

He promised a "comprehensive decision" on the POSCO project, regarded as a test case of India's investment climate as it seeks to draw much-needed foreign capital to upgrade its badly dilapidated infrastructure and boost industry.

Analysts say approval could reassure worried foreign investors that industrial projects can win environmental approval despite stricter enforcement of rules by Ramesh.

The POSCO project, which has been the target of protests by locals worried about losing their land and livelihoods, is expected to win approval from Ramesh as an environment ministry panel has already given its nod.

Ramesh added he hoped an "amicable solution" could be reached on another controversial project -- the $3 billion Lavasa residential and commercial "hill city" being built in western Maharashtra state that ran into government charges of illegal construction.

Lavasa has been planned as India's first new hill station since India's independence from Britain in 1947.

Signalling new flexibility, the minister has also said he might reconsider a refusal to allow Vedanta to expand its aluminium refinery sixfold in the eastern state of Orissa.

However, Ramesh said there would be be no retreat on his decision last August to stop Vedanta mining bauxite in an area held sacred by tribespeople.

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