United Nations human rights experts said Tuesday a giant steelmaking project by South Korean giant Posco in eastern India could displace up to 22,000 people who risked falling into abject poverty.

The group, comprising eight experts, urged Posco immediately to halt construction of the plant in the Jagatsinghpur district of Orissa state, citing concern for the villagers.

The construction must not proceed "without ensuring adequate safeguards and guaranteeing that the rights of the thousands of people are respected", said a statement from the Geneva-based Office of the UN High Commissioner for Human Rights.

Posco, the world's fourth-largest steelmaker by output, has said it remains committed to the $12 billion steel plant project, touted as India's biggest single foreign direct investment.

But the project, initially agreed in 2005, has been mired in delays due to environmental concerns and opposition from locals who say the plant would interfere with their traditional forest-based livelihoods and uproot them from their homes.

"People should not be impoverished in the name of development. Their rights must take precedence over potential profits," said Magdalena Sepulveda, the UN Special Rapporteur on extreme poverty and human rights.

The experts also urged the Indian government to respond to their concerns and ensure that the human rights of the affected people are protected.

Industrialisation has been long championed by economists as a way to pull tens of millions of Indians out of poverty.

But acquiring land for factories, roads, housing and other projects has created sometimes deadly battlegrounds, with many farmers complaining they have been forced to sell at below market rate and robbed of their livelihoods.

The Posco deal has been watched as a test case by foreign investors, eager to enter India's fast-growing economy but wary of the potential for environmental and other concerns to derail their plans.

In July Posco said it was dropping a separate project in India's southern state of Karnataka because of problems in obtaining mining rights and vociferous opposition from local residents.