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.