(Adds POSCO protest) By Bappa Majumdar KOLKATA, March 17 (Reuters) - Ruling communists in India's West Bengal state on Saturday dropped plans to build a low-tax industrial hub on farm land, three days after 14 people died in clashes between police and villagers. The decision to move the project to another location in the state set off celebrations and fresh protests. The communists and their allies said the special economic zone (SEZ) and industrial hub would no longer be built at Nandigram, 150 km (90 miles) south of state capital Kolkata. "There has been a lot of bloodshed and the left partners decided in a meeting to shift the SEZ from Nandigram," Left Front chairman Biman Bose told reporters. India is developing the SEZs tax havens to lure foreign investors and close the gap with China's manufacturing, but many villigers in West Bengal and elsewhere are unhappy with the compensation being offered for their land. Bose said the process would begin soon to "bring peace back in Nandigram" and police would be withdrawn in phases. Officers opened fire in Nandigram on Wednesday after farmers and activists attacked them as they tried to enter an area set aside for the park, officials said. Fourteen people -- including at least three women -- died. Siddiqullah Choudhury, chief of the Jamiat-e-Ulema Hind, a Muslim group leading the protests, said: "We have taught the government a lesson they will never forget. You cannot play with the lives of innocent villagers."A Bengali-language TV channel showed people dancing in Nandigram as they waved flags of leading opposition party Trinamul Congress and shouted slogans. The park was to be built with the help of Indonesian conglomerate the Salim Group. In another sign of unrest, farmers beat up government officials who were measuring land for an industrial project in Deganga, 60 km (37 miles) north of Kolkata. In the neighbouring state of Orissa, about 500 villagers marched to protest against a proposed $12 billion steel plant by South Korea's POSCO Co. Ltd. <005490.KS>, which has also been hit by violence over the purchase of farm land. Holding bamboo sticks, protesters shouted slogans, saying they would not allow POSCO to start the project, and tore down billboards welcoming the steelmaker, witnesses said. "The decision to stall the acquisition of farm land for industry will have a ripple effect on similar movements," said Abhirup Sarkar, an economist at the Indian Statistical Institute. "Wherever landless labourers are in a majority the government will face similar problems," he added. (Additional reporting by Mark Williams in New Delhi and Soumyadip Nayak in Bhubaneswar)
