In the face of growing protests by poor local farmers, Tata officially stopped work at its Nano plant. The firm said it was considering finding another production site for the world's cheapest car, whose launch was originally scheduled for October.
India's Tata Group on Tuesday officially suspended construction of a plant to build the world's cheapest car in the face of unrelenting protests and said it was looking at new sites.
The group, which had hoped to market the four-door Nano for 100,000 rupees (2,264 dollars) by October, said it was considering shifting the plant from its site in the Singur district of Marxist-ruled West Bengal state.
"Tata Motors has been constrained to suspend the construction and commissioning work at the Nano plant in Singur in view of continued confrontation and agitation at the site," the company said in a statement.
"In view of the current situation, the company is evaluating alternate options for manufacturing the Nano car at other company facilities."
The announcement came as thousands of protesters continued to blockade the nearly completed Nano car plant in Singur, a suburb of state capital Kolkata, saying poor farmers had been evicted to make way for the factory.
The protesters, led by local politicians, say they will lift the siege only if 400 acres (160 hectares) of land is returned to the owners.
Protests in the area have been going on for two years but recently escalated. On Friday, the company said it was halting work at the project because it could not ensure its employees' safety.
Tata Motors has already poured 350 million dollars into the project.
The state government acquired about 1,000 acres for the plant, but the activists insist only 600 acres are needed.
The Tata group, whose business interests span locomotives to cosmetics, said it was suspending the project because of security fears.
"The decision has been taken in order to ensure the safety of its employees and contract labour who have continued to be violently obstructed from reporting to work," the Tata statement said.
A company spokesman described the situation at Singur as "hostile and intimidating."
"There is no way this plant could operate efficiently unless the environment became congenial and supportive of the project," he said.
Company chairman Ratan Tata had earlier warned he would move the plant out of the coastal state if the protests at Singur continued.
Indian businesses joined ranks against the protests, saying the move to suspend operations would dent investors' confidence.
"Corporates would now want to know if they can go where they are wanted," Dilip Chenoy, chief of the Society of Indian Automobile Manufacturers, said in New Delhi.
The country's largest trade lobby also backed Tata.
"It is extremely unfortunate because nothing has been done by the Tatas in Singur in terms of acquisition of land which has been outside the legal framework," said Chandrjit Banerjee, chief of the Confederation of Indian Industries.
Venu Srinivasan, chairman of India's leading manufacturer of motorcycles and scooters TVS-Suzuki, warned the development would hurt India.
"It is a large scale project and everything is above board and if the whole thing is brought to a stop due to politics then it certainly shakes the confidence of people investing in India," he told AFP.
Date created : 2008-09-03