Kolkata: Tata Motors Ltd said it wouldn’t restart work at its Singur plant because the accord between the government of West Bengal and protesters opposing the project isn’t detailed enough.
After the company, which planned to make its Rs1 lakh car, the Nano, at the factory, made its stance clear in a statement, West Bengal chief minister Buddhadeb Bhattacharjee announced changes in the terms of the accord and said the government would try to keep alive the project which is an important one for a state that hasn’t met with great success in the past in attracting private investment.
The state’s commerce and industry minister Nirupam Sen said the government agreed with Tata Motors that the project was an integrated one— where the car maker and its part suppliers functioned from adjacent units. One of the terms of the settlement reached late on Sunday night was that some of the 997 acres acquired for the project would be returned to farmers.
Sen also said that the additional compensation offered by the state would benefit all 13,000-odd farmers who sold land for the project, and not just the 2,200 who are yet to accept the payment as a sign of protest.
The firm wasn’t involved in the deal arrived at by the state government and the leader of the rival Trinamool Congress party, Mamata Banerjee, and mediated by West Bengal governor Gopalkrishna Gandhi.
Monday’s developments are the latest twist in a drama that began in 2006 when West Bengal’s communist government and the Tata group announced that the latter would set up the factory to make its so-called people’s car at Singur, around 20km from Kolkata. The government acquired land from farmers for the project, forcibly in some cases. Protests intensified on 24 August after the Trinamool Congress started a near-siege outside the factory. On 22 August, Tata Motors’ chairman Ratan Tata said he was considering moving the factory even after spending around Rs1,500 crore on it to protect employees from violence.
Construction of the factory began in January 2007 and the Nano is scheduled for an October launch.
Tata Motors has done more than just express its displeasure at the lack of clarity in the settlement, one West Bengal government official said. “It’s over—they’re going,” added this official who did not wish to be named and who claimed that Tata Motors had told the state’s industry ministry that it had decided to shelve the project.
“It’s too late for them to pull out,” said Mayur Milak, an analyst at Mumbai-based Alchemy Share and Stock Brokers Pvt. Ltd who has a “sell” rating on the Tata Motors stock. “But as long as clarity isn’t there, delays will mount.”
Under the accord finalized on Sunday, the government had agreed to return some land from within the 997-acre plot allotted to the auto maker and its component suppliers. A spokesperson for the company reiterated that Tata Motors was opposed to the idea of separating the so-called vendor park, or the space allotted to component makers, from the main factory.
A person familiar with the matter said that Tata Motors was unhappy at not being consulted by the government before the deal was finalized.
On returning to Singur from Kolkata on Sunday night, Banerjee said she had asked the government to return 300 acres from within the project site, and move the vendor park to a site across the highway. Sen claimed this created confusion and that the state had clarified to Tata Motors that it wouldn’t give in to these demands.
Under the terms of the agreement, a four-member committee will be formed to assess how much land is available (to be returned) within the factory site. This committee will be headed by the Trinamool Congress’ legislator from Singur, Rabindranath Bhattacharya. It will submit its report to the government within a week, Gandhi announced on Sunday evening.
Meanwhile, India’s largest industry lobby group defended Tata’s stand. “It is not clear what this agreement actually means. Does it ensure the continued viability of the Nano project...,” said Tarun Das, chief mentor of the Confederation of Indian Industry.
Meanwhile, Infosys Technologies Ltd said on Monday it was rethinking its plan to enter West Bengal. The state government had said earlier this year that Infosys would set up a software development centre in Kolkata, but the company’s director T.V. Mohandas Pai told NDTV 24x7—a news channel—that the situation in West Bengal was “scary”.
Bloomberg’s Saikat Chatterjee contributed to this story.