Tata abandons cheapest car plant

Tata abandons cheapest car plant
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The Tata Nano was unveiled at India's biggest car show in Delhi in January

India's Tata group has abandoned plans to build the world's cheapest car in the eastern state of West Bengal.

Tata group chief Ratan Tata said: "We have little choice but to move out of Bengal. We cannot run a factory with police around all the time."

He was speaking after protests in a row over land acquired from local farmers.

The car, the Nano, is expected to cost about 100,000 rupees ($2,130). It was due to be launched in October and will be ready "this year", Mr Tata said.

We will have to make the best of the deadline that we have

Tata group chief Ratan Tata

The BBC's Subir Bhuamik in Calcutta says the company is initially expected to produce several thousand Nanos this year at other sites in India.

It had planned to make 250,000 cars a year at the Singur plant in West Bengal, rising to 350,000.

A number of other car firms also plan vehicles to compete with the Nano but have not yet begun production.

The dispute in West Bengal highlights a wider problem between India's growing industry - which needs land - and its farmers who are unwilling to give it up.

'Offers'

Work at Tata's Singur plant has been suspended since the end of August following protests led by the state's opposition Trinamul Congress party.




Exclusive look at the Tata Nano

Mr Tata said the Nano will be built "within this year but I can't tell you where".

"We are going to do everything possible to come close to the deadline we had established," he told journalists in Calcutta.

"We have got offers from several Indian states but we have not yet finalised where to produce the Nano... All these issues we will announce in the next few days when we have a clearer picture."

Mr Tata said his group would still consider West Bengal as an investment destination in future.

"I value the considerable intellectual resources this state has, but something will have to change here," he said.

He was speaking after meeting the West Bengal chief minister Buddhadev Bhattacharya and his colleagues.

"This is a black day for Bengal. We will have so much more difficulty getting investments now," said the state's industry minister, Nirupam Sen.

Compensation

The West Bengal government acquired 1,000 acres of land for the Nano project two years ago.

More than 10,000 farmers accepted compensation for their land, but just over 2,000 of them refused and demanded land be returned.

During the protests Tata's engineers and workers were attacked, prompting the group to stop work.

Our correspondent says the Bengal governor then intervened and tried to mediate a deal between the government and the opposition but that did not work.

The plant was seen as a key part of industrialisation efforts in what is one of India's least developed states.