Why did the central government feel that allowing the POSCO industry to set up in Orissa was important?

To set a positive example for future investments

The correct answer is Option 4 - To set a positive example for future investments

Pohang Iron and Steel Company, a South-Korean multinational steel-making company planned to set up a ‘Steel Plant’ in the Jagatsinghpur district of Orissa in the beginnig of the first decade of 2000 year..
The iron ore resources lay in some of the most underdeveloped and predominantly tribal districts of the state. Different people had different concerns regarding the setting up of Industry in the region:
The tribal population feared that the setting up of industries would mean displacement from their home and livelihood.
The environmentalists feared that mining and industry would pollute the environment.
The central government felt that if the industry was not allowed it would set a bad example and discourage investments in the country.