Tata's Nano plant still on hold despite deal

Tata Motors' dispute with farmers in India's West Bengal over the building of its Nano factory is not over yet, despite Monday's deal. Suggesting the agreement is unclear, the carmaker has requested stronger guarantees before resuming works.


Construction of a factory to build the world's cheapest car hung in the balance Tuesday, as India's Tata Motors demanded stronger guarantees from a deal to end violent protests at the plant.

The Marxist government in West Bengal state had announced Sunday an agreement to halt the demonstrations over farmland seized to build the Nano car factory.

But India's top vehicle maker refused to resume construction immediately, arguing that the accord lacked clarity and asking for firm pledges that it would be allowed to operate smoothly.

A four-man committee set up by the state government to resolve the dispute was due to meet for the first time Tuesday in a bid to keep the deal alive.

Tata Group chairman Ratan Tata warned last month he would abandon the plant unless his workers' safety could be assured, even though the company has already poured 350 million dollars into the project.

The company said Monday it would only move forward if "satisfied the viability of the project is not being impinged... and all stakeholders are committed to develop a long-term congenial environment for smooth operations."

The Nano, targeting millions of Indian first-time car buyers, is slated to retail at just 100,000 rupees (2,260 dollars).

Protests against the plant have been going on for two years, but demonstrators had upped the ante in recent weeks, besieging the factory and threatening to kill workers.

Opposition has been spearheaded by West Bengal's Trinamool Congress party, which had been pushing for land appropriated for the plant to be returned to evicted farmers.

The deal announced on Sunday, which followed three days of talks between the protesters and the government in Kolkata, included a pledge to return some of the land earmarked for the factory's ancillary units.

However, Tata sources insisted any move to shift the units -- mainly automotive part vendors -- from the plant site to other areas would affect the tightly managed supply chain and drive up costs.

"We are not closing the window" on a settlement but "we are going ahead with Plan B" to roll out the Nano from other Tata plants, a senior company source who asked not to be named told AFP.

"We have a business to run -- this is a project of national importance, the whole world is watching it."

The plant in Singur on the outskirts of Kolkata is 90 percent complete, and Tata Motors, part of the tea-to-steel Tata Group, has said it aims to launch the Nano in October, in time for the big-spending annual Hindu festival season.

All work on the factory was halted over a week ago when protesters barred workers from entering the plant.

The West Bengal government had wooed Tata Motors to set up the plant in Singur, hoping it would lead the way for the state's industrial resurgence and create jobs.

Scrapping the plant would hit Tata Motors' finances, already under pressure from its 2.3-billion-dollar acquisition of British motoring icons Jaguar and Land Rover earlier this year, and from slowing domestic vehicle sales.

The dispute reflects a wider conflict between farmers and industry over land rights across the nation.

On one side are many farmers who say they will starve without their land, while business and government say India must industrialise to create jobs for its army of young people.

Daily newsletterReceive essential international news every morning