BHIMPUR, India – Fearful of landmines and under fire from rebels, Indian police struggled on Friday to enter a Maoist liberated zone close to east India's biggest commercial city of Kolkata.

Hundreds of Maoists, who are expanding their influence in India, have chased away police from a tribal area based around the town of Lalgarh about 170 km (100 miles) from Kolkata, capital of West Bengal.

We are advancing very cautiously and we are in no hurry to rush into Lalgarh, Kuldiep Singh, a senior police officer, told Reuters by telephone. It will take us some more time to regain Lalgarh and at the moment we are 10 km (6 miles) away.

Police fired teargas shells and rubber bullets to break through human walls of villagers late on Thursday in a bid to advance toward Lalgarh, a small town under Maoist control.

India's JSW Steel Ltd, the country's third largest steel producer, is setting up a $7 billion, 10-million tonne steel plant near Lalgarh, and the growing presence of Maoists across swathes of rural India has worried many investors.

The rebels have killed at least 10 government supporters so far and distributed leaflets in villages, warning of a fierce battle unless the government withdrew its forces.

The Maoists started their armed struggle in West Bengal's Naxalbari town in the late 1967, and have expanded their support among villagers by tapping into resentment at the government's recent pro-industry push.

Hundreds of villagers, holding bows and arrows and backed by the Maoists, are trying to stop the police from advancing, officials said.

The violence has unnerved the industrial sector after violent protests by farmers forced the scrapping of a Tata Motors' Nano car plant and a $3 billion chemicals hub complex.

Investors are waiting and watching the situation unfold. It is going to delay industrialization (in West Bengal), Sandipan Chakraborty, Managing Director of Tata Ryerson Ltd, owned by Tata Steel and the U.S.-based Ryerson Inc.

India is battling Maoists across eastern, central and southern India, an insurgency Prime Minister Manmohan Singh has described as the biggest internal security challenge since independence.

(Additional reporting by Sujoy Dhar in Kolkata and Bappa Majumdar in New Delhi; Writing by Bappa Majumdar, Editing by Alistair Scrutton)