Naveen Patnaik has ordered an inquiry for the protests and also stop the felling of trees in the area.
Odisha Chief Minister Naveen Patnaik today cancelled the setting up of a beer-bottling plant in Dhenkanal district, two days after a clash between locals and the police over the felling of hundreds of trees for the project.
Mr Patnaik's action came on the basis of a report by D V Swamy, the revenue divisional commissioner (RDC) of the northern division, today.
"The chief minister has ordered cancellation of the bottling plant in that location after receiving the report of the RDC on tree-cutting," a statement released by the Chief Minister's Office (CMO) said.
In his report, Mr Swamy said, "The allocation of (the) Bottling plant may be cancelled and alternative site may be provided. Unnecessary felling of trees may be stopped forthwith and immediate plantation should be taken up."
On Saturday, locals came out in large numbers to protest against the administration's move to cut down over 950 trees for the project by a private firm, P&A Bottlers Ltd, at Balarampur near Bhubaneswar.
The agitators, mostly women, had clung to tree trunks in their attempt to stop the felling of trees, leading to a tussle between them and the police, an official had said.
It triggered sharp protest from different quarters, prompting Mr Patnaik to order an inquiry on Sunday and stop the felling of trees in the area.
The issue was also raised in the Assembly earlier in the day, where the Congress had moved an adjournment notice for holding a discussion on how and why a large number of trees were felled for setting up the brewery.
However, the discussion could not be held as the House was adjourned till 3 pm after the ruling Biju Janata Dal protested against the Centre's decision of changing the funding pattern of the post-matric scholarship for Scheduled Caste students.
The villagers said the locals had been nurturing the trees for decades, developing the area into a community-developed forest.
Officials said the 12.5-acre land was identified by the Industrial Infrastructure Development Corporation (IDCO) -- the nodal agency for facilitating land for industries -- for setting up of the beer unit.
District Sub-Collector Pitambar Samal said the patch of land was not notified as forest belt and had already been declared an industrial estate.
The chief minister had, earlier this month, laid the foundation for 14 industrial units, including the beer plant.