Sunday, August 24, 2008

Tata Nano may pull out of West Bengal

Ratan Tata on Friday, 22 August, 2008 threatened to shut the Tata Nano cars project in West Bengal if it continues to be haunted by violence. Tata said that it is for the people of West Bengal and Kolkata to decide whether Tata Motors is unwanted, or accept as a good corporate citizen and if it is the latter, then it is good. He said that if it was the other, then it would be impossible to alter the plan, following which Tata Motors would have to make a move out of West Bengal despite whatever investments have been already made in the Nano car project.

Tata told reporters that Rs 1500 crore of investments had already been made in the car project. "If anybody is under the impression that we have made this investment and will not move, they are wrong.” He added, "We are deeply concerned at the violence and disruption and at the safety of our employees, equipment and investments... at Singur," he said ruling out alteration of project plan as demanded by Trinamool Congress chief Mamata Banerjee.

Asked about the reason for moving, he said, “I can’t bring our managers and their families to West Bengal if they are going to be beaten, if there is violence constantly. If their children are going to be afraid to go to school, and I am sure that is not what West Bengal is”.

On other problems faced by Tata Motors, he said, “our compound walls have been broken, hordes of people are coming in, materials are being stolen. We can’t build and operate a plant under police protection. If that is the way it is to be before we start, we can imagine our concern on what will happen once we start to operate”.

On 400 acres of land earmarked for the ancillary units, Tata said that the small car 'Nano' was a unique product. "It is necessary to incorporate the ancillary units in the same location to keep the logistics cost low." A total of 55 vendors are located near the mother plant, which was coming up on 600 acres.

West Bengal had been long ignored by industrial houses, including the Tatas. It may be recalled that once Kolkata was known to many as the business capital of India. But following problems similar to what the Tata Motors face now, most of the Industries in West Bengal moved out of West Bengal to other states.

But the states fortunes started looking up recently when the investors felt their industries are safe in West Bengal. According to an Assocham report, West Bengal is currently among the top preferred destinations alongside Maharashtra, Andhra Pradesh, Orissa and Rajasthan. During the first six months of this year, the capacity expansion plans by corporates amount to a whopping $243 billion. West Bengal for its part attracted investments of $19.26 billion in steel, hospitality and manufacturing sectors. The Tatas too have made substantial investment in the state and a pull out at this time will cost Tata Motors dearly. But West Bengal will be the biggest loser.

There is no way Tata Nano, the people's family car, the world’s cheapest car rolls out of the Singur plant on schedule later this year, if the political agitation lead by Mamata Banerjee continues. This will be a serious loss for West Bengal that needs to generate jobs for the unemployed youths in West Bengal. If Tata Motors relocates out of West Bengal, the ancillary units will also move out. And if a clean group like the Tatas is forced to move out, the scope of other industrialists settling up shops in west Bengal will be very bleak.

The other States are keen to welcome Ratan Tata and Tata Motors. Bhupinder Singh Hooda, the Chief Minister of Haryana, said, “Why not? It is a prestigious project. We will welcome him to Haryana”. Y S Rajasekhar Reddy, the Chief Minister of Andhra Pradesh said, “Andhra Pradesh Government is ready to offer all incentives required for Tatas to locate their car plant here”. A senior official of the Orissa Chief Minister Naveen Patnaik’s office said, “Orissa Government had already proposed the Tatas to set up a second automobile plant in the state”. And B C Khanduri, Uttaranchal Chief Minister said, “We have not yet received any proposal from Tata Motors with regard to setting up of a Nano plant”.

Asked whether the company would be able to roll out the Nano within the stipulated deadline of October-December quarter of 2008, Tata said "it is our desire to do so."

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