September 3, 2008
Tata Halts Work on Factory for Nano
By Rina Chandran and Sujoy Dhar
Tata Motors said Tuesday that violent protests had forced it to suspend all work at a factory in eastern India where it planned to make the Nano, billed as the world's least-expensive car.
The company said it would consider alternative sites for the factory.
Tata said that for the past five days it had canceled work at the site, in Singur, because of threats from protesters, who have been led by a regional opposition party. The site is an hour's drive from Calcutta, the capital of West Bengal.
The dispute reflects a larger standoff between industry in India and farmers unwilling to part with land in a country where two- thirds of the population depend on agriculture.
"This decision was taken in order to ensure the safety of its employees and contract labor, who have continued to be violently obstructed from reporting to work," the company said.
The suspension came just as protesters agreed to talks over land seizures for the project, which analysts said stepped up pressure to resolve the dispute.
The prospect of talks had raised hopes that the car, to be priced at 100,000 rupees, or $2,250, could roll out on time in October to coincide with the Indian festive season.
"I am wondering how Tata can make a statement when talks are on," said Partha Chattopadhayay, a leader of the Trinamool Congress party spearheading the protests. "I don't go by this statement. I have to wait."
Tata Motors said it was putting together a detailed plan for the relocation of the plant and machinery and was evaluating options for building the Nano at other company facilities.
It said the project's partners, which had started work at their own plants at the site, had also suspended work.
The company chairman, Ratan Tata, said last month that he was prepared to move the plant from West Bengal, despite having invested $350 million in the project, because of the risks to employees from the protests.
The Nano project has been billed as the key to the rejuvenation of industries in West Bengal, where the world's longest-serving democratically elected Communist government has changed tack after decades of focusing on helping agriculture and poor farmers.
The West Bengal government urged the Trinamool Congress to work to retain the Nano plant in the state.
"It is very unfortunate - it is a very sad day," said Nirupam Sen, industry minister for West Bengal. "I could never imagine the opposition would be so irresponsible."
The announcement of the Nano in January was hailed by the state's governing Communists, but protests started after the government took over 400 hectares, or 1,000 acres, of farmland for the factory. The government offered compensation, but some farmers with smaller land holdings have refused it, demanding that the land be given back to them.
The disputed land measures about 160 hectares.
The Trinamool Congress has come under pressure to find a way out of the standoff after industry lobbyists and analysts warned that the protests could scare away investors.
"I think this could create pressure on those opposing the project," said Abhirup Sarkar, an economist and social commentator in Calcutta.
Hoping to resolve an issue threatening its industry-friendly image, the state government has offered to discuss fresh compensation packages to retain the plant.
Sujoy Dhar reported from Calcutta.
Originally published by Reuters.
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