Kolkata: Tata Motors Ltd has stopped work on its small car factory at Singur because it finds the situation around the plant “intimidating” and is evaluating alternative options to make this car at its other facilities, the company said in a statement late Tuesday evening.
Apart from denting the image of the Communist-ruled state of West Bengal, where Singur is located, the move could also delay the launch of the so-called people’s car, the Tata Nano.
Several Indian states, including Haryana, and Sri Lanka have invited Tata Motors to set up the factory to make the Nano, one model of which will be priced at Rs1 lakh when it rolls off the company’s assembly lines.
The statement from Tata Motors, which also said that the company is preparing a detailed plan to move the plant and equipment to another site and that the company’s suppliers were also stopping work on their factories in Singur came even as West Bengal was scrambling to find a solution to the issue.
West Bengal acquired land from farmers for the Tata Motors project and the state government’s political opponent, the Trinamool Congress has alleged that this land was acquired forcibly in some cases. Although the issue dates back to September 2006, it has flared up again in recent weeks with both Tata Motors and Trinamool Congress chief Mamata Banerjee raising the pitch of their statements. Tata Motors’ managing director Ravi Kant and chairman Ratan Tata have both previously said that the company would, notwithstanding an investment of Rs1,500 crore, move the location of the plant if it couldn’t guarantee the safety of its employees.
Banerjee’s response has ranged from indifference over the fate of the car plant to a suggestion about halving the amount of land given to the company by Singur by moving the plants of its suppliers elsewhere. Ten days ago, the Trinamool Congress started a sit-in at Singur demanding the return of 400 acres of the total 1,000 acres that had been given to Tata Motors.
Tata Motors’ Tuesday statement came even as the state government, especially chief minister Buddhadeb Bhattacharjee tried to arrive at a settlement concerning the most significant investment West Bengal has attracted in the past few decades.
On Tuesday, after the company released its statement, the chief minister responded with one of his own that said the state’s governor Gopalkrishna Gandhi could mediate in the dispute. The Trinamool Congress has been asking for the governor’s involvement in settling the issue.
“It’s not my headache whether they leave or stay. I still maintain they are welcome to set up the plant here if the government returns 400 acres to farmers,” said Banerjee. “It’s a sad day for the state. We hadn’t thought the opposition could be so irresponsible,” said West Bengal’s commerce and industry minister Nirupam Sen.
If Tata Motors pulls out of Singur, the launch of the Nano may be delayed by at least a few months as the company moves the almost-ready assembly line to its factories in Pune in Maharashtra or Pantnagar in Uttarakhand.
“Losing an iconic brand would not be good for the state’s pro-investment image,” said Biswadip Gupta, managing director of JSW Bengal Ltd.
“We wish that the Singur dispute between Tata’s and farmers had not reached this point and I believe it need not have if there had been better and more open dialogue between the investors/govt and the local community earlier on,” said Rajeev Chandrasekhar, president of industry lobby Ficci.
The acquisition of farmland for industrial projects including economic enclaves has become a contentious issue over the past few years. On Tuesday, thousands of people demonstrated in Bhubaneswar, the capital of Orissa against South Korean firm Posco’s plans to build a steel plant in the state. Villagers in Orissa claim the Posco plant will force them off their farmland and could displace around 20,000 people. Posco and the government say the plant will create jobs.
Aveek Datta and Reuters contributed to this story.