The cost of complying with environmental regulations has been cited as a major regulatory burden on businesses. Since new firms are not restricted in their choice of location by sunk costs, an examination of new firm location choices across jurisdictions with varying environmental stringency would allow an assessment of the importance of this factor. This paper uses a unique establishment level dataset from India to test this proposition. A conditional logit model is used to estimate the impact of different variables on firm profits as reflected in firm location decisions. After controlling for the impact of factor price differentials, infrastructure, and agglomeration, the number of proposed new plants in different states of India does not appear to be adversely affected by the stringency of environmental enforcement at the state level.