Tata has abandoned its new Nano factory due to violent protests by locals
3 October 2008

Tata Motors has abandoned its new Nano factory in West Bengal because of violent protests by local farmers.

The company, which recently put production at its Singur site on hold because of concerns over the safety of its employees, has decided to move the production line and machinery, but not yet finalised the new location.

Tata Motors has received offers of land from other Indian states keen to host the factory, including a potential 1000-acre package from Karnataka in the south west of India.

There have also been suggestions that it might manufacture the Nano in neighbouring Sri Lanka, but many analysts believe that it will move to Pantnagar in the northern Indian state of Uttarakhand, where Tata already has a truck factory and infrastructure.

The Tata Nano was the brainchild of Tata Motors founder, Ratan Tata, and was originally conceived as the 'One Lakh' (100,000 rupees or roughly £1250) car.

Powered by a 33bhp, rear-mounted two-cylinder petrol engine, the fuel-efficient Nano four-seater was predicted to revolutionise family transport in India.

Recent increases in the cost of materials and borrowing mean that the company will be unlikely to meet that low price target, but the company still wishes to undercut vehicles from rivals such as Maruti Suzuki.

Ed Keohane

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Comments
2

3 October 2008

What a saga! I thought this had all been sorted out, but clearly not.

You'd have thought the factory would bring prosperity to the region and guarantee jobs for a huge number of local people. Maybe I'm missing something here. I suspect Ratan isn't too happy about the situation either - it can't be easy spending that much money building a new factory, then having to up and leave. You have to wonder if, on top of material cost increases, the Nano will now become even more expensive to cover this whole episode.

Crazy!

4 October 2008

Nope, not crazy. The land for the factory was forceably taken from the local peasant farmers. Riots ensued when the farmers fought back and demanded compensation at least for their land. Don't forget India is a poverty ridden country with vast wealth for the few at the top like Tata and penury for the peasants or untouchables at the bottom. This whole Nano, £1,000 car is grade A BS. Material costs for plastics, electrics(copper) etc have doubled and trebled since the concept stage. Tata is trying to save face by blaming rioting peasants for the no-show of his miracle car. The whole thing is unviable and believe will be run into the sand and then forgotten about within 12 months.

Tata has borrowed to buy JLR with a bridging loan. Worldwide refinancing credit on cheap terms, circa 5% or so, has disappeared. JLR is threatened by the empty pockets of Tata. His best bet is his tie up with Fiat and 6% odd shareholding by Daimler. Without these links I think Tata Motors would be bankrupt already. India in general and its miracle economy is very unstable and unlike China's boom is very narrowly based on a small number of incredibly rich families. It is not a recipe for long-term growth stability.

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