Mumbai: Ratan Tata, chairman of Tata Motors Ltd announced at a press briefing that the company is abandoning its Singur plant that was to produce the world’s cheapest car after weeks of violent demonstrations triggered by a land dispute.

The move will hamper the company’s plans to start selling the car, branded Nano, and Tata said he could not comment exactly when the car would now be launched.

Tata would not say from where the vehicle would rollout first, although the company has previously said that its factory in Pantnagar in Uttarakhand would also produce the car. The governments of Gujarat, Karnataka, and Maharashtra have invited Tata Motors to house the factory to make the Tata Nano in their state.

It’s over: Ratan Tata announces the pull out of the small car factory from Singur, at a press conference in Kolkata on Friday. Ashok Bhaumik /PTI

Shifting to a new site may hinder Tata’s challenge to Maruti Suzuki Ltd, maker of more than half the cars sold in India. “It’s a big setback for Tata Motors," said Gaurav Lohia, an analyst at KR Choksey Shares and Securities Pvt. Ltd in Mumbai who has a “buy" rating on the stock. “I expect the production and rollout of the Nano to be slowing down."

“Taking all things into account, mainly the wellbeing of our employees, the safety of our contractors and, in fact, our vendors also, we’ve taken the very regretful decision to move the Tata Nano project out of West Bengal," Tata said at the briefing.

Apart from the Tata Nano plant, the facility at Singur near Kolkata also had a so-called “vendor’s park" for the company’s parts suppliers.

Tata Motors had planned to make 250,000 cars at the Singur plant initially. It decided to set up the facility in West Bengal almost two years ago. The state government provided land for the project by acquiring it from farmers some of who allege that this was done forcibly.

Matters came to a head recently, when work at the plant was nearly complete with Mamata Banerjee, leader of the Trinamool Congress, a rival of the ruling Left Front government in West Bengal and a long-time opponent of the plant, launching a protest just outside the factory.

Several subsequent efforts to resolve the issue failed. “If someone had put the gun to my head I would not move away but I think Banerjee has pulled the trigger," Tata said at the briefing.

The West Bengal government had given around 1,000 acres for the Tata Motors plant and the vendors park. Banerjee wanted 400 acres to be returned.

“We could never imagine that the main opposition party along with a few people would indulge in such narrow and destructive politics, which was responsible for the project moving out. Chief minister repeatedly told Tata that majority of people in West Bengal do not support this destructive politics and were in support of this project," said Nirupam Sen, West Bengal’s commerce and industries minister.

Shares of Tata Motors fell 2.7% to 330.5 before the announcement. They have declined 54% this year, compared with the 38% drop in the benchmark Sensex index of the Bombay Stock Exchange.

Mint’s Aveek Datta and Romita Datta and AFP contributed to this story.

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