September 11, 2008

Indian Farmers Threaten to Renew Nano Protests

Indian farmers have threatened to resume protests that have blocked construction of a factory to build Tata Motors' low-cost Nano car unless talks aimed at resolving a dispute over land bring results soon.

The Nano project in the eastern Indian state of West Bengal has been mired in the land dispute since the automobile was introduced in a blaze of publicity in January. The car is expected to be priced at little more than 100,000 rupees, or $2,240.

Farmers unwilling to give up their land for the production site blocked roads and, with backing from the local opposition party, threatened workers. This prompted Tata Motors to suspend work on the factory last week and scout for other sites.

The Nano protests reflect a larger standoff between industry and farmers reluctant to give up land in a country where two-thirds of the population depend on farming. As Tata Motors, the largest vehicle maker in India, threatened to walk away from West Bengal, the state's Communist government and the opposition Trinamool Congress Party, which has been leading the protest, began negotiations and formed a committee to resolve the dispute.

"We have not given up the protests," said Partha Chattopdhayay, a senior leader of the Trinamool Congress, which has halted its demonstrations for seven days. "We have only suspended our agitation."

The West Bengal government has agreed to a land-based solution for the farmers but ruled out major concessions within the Tata Motors site. The factory and its ancillary units were being built on about 1,000 acres, or 400 hectares, of land. About 400 acres, earmarked for ancillary units, are under dispute.

After the first meeting of the committee Tuesday, a member representing the farmers said they wanted to regain land that had been designated for the project area.

"We have demanded 300 acres," said Rabindranath Bhattacharya, a Trinamool Congress leader.

Tata Motors said that separating the ancillary units from the main plant would increase the project's cost.

In a letter sent to the government Tuesday, Nirupam Sen, the industry minister of West Bengal, quoted a Tata Motors official, Ravi Kant, as having said, "The government should not take any step in future which may disturb this arrangement and understanding agreed upon earlier."

The Communist government added that it would maintain the integrated nature of the Nano factory, a stand that analysts believe could lead to another showdown.

The standoff could reduce the production capacity for the Nano but is unlikely to delay the planned introduction of the car in October, since other plants are already producing the vehicles.

The conflict began after the government acquired farmland for the factory last year, paying compensation to farmers. But some rejected the compensation offer, and demanded that at least 400 acres be returned.

The Nano dispute has also led to calls for speedy reforms of a colonial-era land acquisition act, which has been the cause of delays at several large industrial projects in the country.

On Wednesday, shares in Tata Motors touched a high of 425.50 rupees before ending 0.5 percent lower at 420.40 rupees in Mumbai.

Originally published by Reuters.

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