"We find ourselves in a situation where half-baked cases are being slapped against top leaders of the industry and retired bureaucrats based on perceptions, interpretations and mere inferences," ASSOCHAM said in its letter.
"We fear that more industrialists could be targets of the CBI probes which in all likelihood would not bring out any substantial evidence of any wrongdoing, but the problem is that the reputation of individual enterprises gets jolted," read the letter.
The industry body said that in case the 'environment of distrust' continued then decision making will be hampered.
"Sir, we are afraid, if this environment of distrust continues, the decision making will get further hampered," ASSOCHAM wrote to the PM.
Meanwhile, the Prime Minister on Thursday said he is not above the law and is ready to face the CBI in coal scam probe even as his office issued a clarification that there was nothing wrong with the Hindalco allocations.
"I am not above the law of the land. If there is anything that the CBI, or for that matter, anybody wants to ask, I have nothing to hide," Singh told reporters while returning from Beijing to India.
The CBI, which is investigating the coal scam, submitted its status report in a sealed envelope before the Supreme Court on Tuesday, containing its probe till Oct 18.
The apex court is likely to take up the report on Oct 29.
CBI sources said the status report contains the details of latest FIRs filed against industrialist Kumar Mangalam Birla, former Coal Secretary PC Parakh and the "competent authority" named by the CBI in its investigation.
Parakh along with Aditya Birla Group chairman Kumar Mangalam Birla were named by the CBI in its fourteenth First Information Report (FIR) in connection with the coal scam.
The Prime Minister's Office (PMO) earlier issued a statement on the allocation of coal block to Hindalco of the Aditya Birla Group, defending the decision as one based on merits even as the coal block allocation scam taint landed at the doorstep of Prime Minister Manmohan Singh and the Birlas after the CBI filed an FIR against Kumar Mangalam Birla.
An industry leader in aluminium and copper, Hindalco Industries Limited, the metals flagship company of the Aditya Birla Group is the world's largest aluminium rolling company and one of the biggest producers of primary aluminium in Asia.
"The Prime Minister is satisfied that the final decision taken in this regard was entirely appropriate and is based on the merits of the case placed before him," said the PMO statement.
The coal scam had sprung into headlines after the Comptroller and Auditor General's (CAG) report on coal block allocation estimated a loss of Rs 1.86 lakh crore to the national exchequer owing to irregular allocations.
The CAG named 25 private companies as beneficiaries of coal block allocations in various states. They included companies like Essar Power, Hindalco, Tata Power, Tata Steel and Jindal Steel and Power Ltd.
--IBNS (Posted on 25-10-2013)