Friday, October 3, 2008

Tata abandons cheapest car plant

India's Tata Company has finally given up on its plan to build an automobile plant in the Indian state of West Bengal.

Tata made a splash when they announced plans to build the "world's cheapest car", a tiny sub-compact called the Nano that would sell for approx. $2,300. The car was a hit with India’s growing, but largely car-less middle class, with people lining up to put in down payments for their own Nano. As part of their plans, Tata built a huge plant near Singur in West Bengal, where they hoped to build up to a quarter million cars per year.

But land for the plant was seized from thousands of local farmers, and while many were willing to take compensation for the land, a group of about 2,000 were not and demanded their farms back. Their protests turned violent in recent months, halting work at the plant. Finally Tata gave in. "We cannot run a factory with police around all the time," said Tata chief Ratan Tata. His company had spent more than $350 million to build the massive factory, which is basically complete and was ready to start cranking out Nanoes.

Officials in West Bengal (which has a Marxist government) are now worried that investors may be scared away from funding large projects in one of India's least developed states. Tata, meanwhile, says that the Nano will be produced at other plants around India.
Sphere: Related Content

No comments: