Mumbai: Concerned about potential labour shortages amid continued grass-roots opposition and a slow pace of work on buildings, Tata Motors Ltd is asking vendors to speed up delivery of components for the Tata Nano, a car that it plans to start selling for Rs1 lakh later this year.
According to two vendors supplying parts for the Tata Nano, the firm has asked key vendors of its 50-strong supplier base in Singur, West Bengal, to deliver components over the next 45-75 days at the latest, even as the completion of its own plant is some 90 days beyond the original deadline of starting production in July.
The vendors didn’t want to be identified because it would jeopardize their relationship with the firm, which has tried to keep details of the Tata Nano under wraps since showing the car in January.
Site for the Rs1,700 crore Tata Motors plant for its Rs1 lakh car Nano in Singur, which is some 90 days behind schedule (Picture by: Indranil Bhoumik / Mint)
The Tata Nano is likely set for an October roll-out from a Rs1,700 crore manufacturing facility in Singur that will be capable of making 350,000 units a year at full tilt.
A Tata Motors spokesperson said that the project was progressing according to the company’s timeline, whereby trial production will begin in June-July, followed with the commercial production of the car in October. The firm said it did not have any information to share on its vendor plans.
“Vehicle makers have experienced that vendors find it difficult to meet timelines,” said the chief executive of a vendor, who is setting up shop there. “There is also an underlying fear that the Mamata situation will surface again,” he added, referring to Trinamool Congress chief Mamata Banerjee, who has led farmer protests against Tata Motors setting up its plant in Singur.
Apart from these political tensions, the two vendors say there is a shortage of trained contractors and builders in West Bengal, which was slowing building work, forcing many vendors to bring in additional contractors from New Delhi, Gurgaon and Pune to get their plants built. Vendors are also grappling with the lack of skilled labour and technicians in Singur itself, which also reflects a general shortage of skilled manpower in India’s automobile industry.
One of the same vendors said that until the January formal launch, many suppliers were sceptical whether the Tata Nano would attract buyers. The generally positive response has now put those fears to rest, he added. Tata Motors has not yet opened bookings for the Nano, but its website has had more than 15 million hits since January.
Tata Motors’ project in Singur has turned into a lightning rod for forcible land acquisition, which has faced mass protests from farmers who say their land is being taken away without their consent to feed the state’s industrialization efforts, of which Tata Motors has become the key symbol.
There have also been constant clashes between police and farmers opposed to the project. In a battle that was taken to court, a Calcutta high court ruling deemed the land acquisition by the state government as legal, creating a further sense of dispossession among farmers.
India, where around 1.4 million vehicles are sold every year, has a huge appetite for small cars, and the launch of the Tata Nano is only going to fuel this demand, coming in the face of scepticism that cars can’t be built and sold profitably for such a low sum.
But by showcasing to the world that it’s not impossible, Tata Motors has set new benchmarks in design and raised the bar for other auto makers trying to build cheap, fuel-efficient four-wheelers. Bajaj Auto Ltd and Renault SA and Nissan Motor Co. are planning to collaborate on a small car that is cheap to use.
Overall, 880,000 small cars are expected to be sold this fiscal compared with 780,000 units in 2006-07. The vehicles market will touch 2.2 million units by 2010, according to the Society of Indian Automobile Manufacturers.