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For Tata in India: Industry vs. Farms


Is he a hero for bringing affordable cars to the masses or a villain for stealing land for his factories? Ratan Tata's fortunes are changing

India's Ratan Tata had always expected his $2,500 car, the Nano, to draw crowds (BusinessWeek.com, 1/10/08). But the nearly 40,000 protesters who recently shut down the highway leading to his factory in the state of West Bengal weren't exactly the fans he was hoping for.

It seems like only yesterday that Tata was being hailed as a hero (BusinessWeek.com, 2/14/08) in his quest to build an affordable car for the masses. But in Singur, a two-hour drive north from Kolkata, he's now being pilloried as a greedy industrialist who conspired with state authorities to rob local farmers of 400 acres. Leading the charge is Mamata Banerjee, a firebrand politician from an opposition party. "Tata Babu, you may be rich, but no matter how many times you say Nano, we say no-no," said Banarjee on Aug. 26, addressing a swelling crowd of farmers outside the factory gates.

The scene at Singur has been playing out with increasing frequency—though on a smaller scale—across much of India. Prime Minister Manmohan Singh's government wants to kick-start an industrial revolution, complete with giant tax-free special economic zones. But its vision of a gleaming factory-powered economy seems to be running headlong into India's dusty agrarian reality. With nearly 700 million people drawing their living off the land, there is little acreage left over for auto plants, steel foundries, and export assembly lines.

The Power of the Protest

If this were authoritarian China, a bunch of angry villagers wouldn't stand much of a chance. But in India's rough-and-tumble democracy, where politicians proudly wear the label of populist, protests like the one at Singur can stall a project for months, if not years.

Just ask Posco (PKX): The South Korean steel giant has spent three years negotiating with residents of the eastern Indian state of Orissa to buy 400 acres of land as part of a proposed $12 billion investment in a steel plant. During that time, the company has endured kidnapping of its executives (who were released) and countless demonstrations. In what would seem to be a victory for Posco, India's Supreme Court recently ruled in support of the state government's decision to rezone forest land as industrial land, in order to accommodate the plant. But the Koreans are not celebrating just yet. "It was an important step forward, but we still have several barriers that have to be removed," says Posco spokesperson Ko Min Jin, of the Supreme Court decision.

It's difficult to tell the winners from the losers in these battles. Orissa, one of India's poorest states, is home to some of the world's richest iron ore and bauxite deposits in the world. A group of international and local companies has pledged $20 billion in investments to help develop that mineral wealth. But because of land disputes, this desperately poor state has seen only a trickle of money come in. The strongest opposition has come from some of the most marginalized of India's citizens—tribal forest dwellers, who have led protests all the way to New Delhi and the Supreme Court. "What would you do if they wanted to destroy your holy place of worship?" says Jitu Jakaka, a 20-year-old member of the Dongria Kondh, an Orissa tribe that has been waging a three-year fight to prevent Vedanta Resources, a London-listed multinational, from mining bauxite from a mountain the tribespeople consider sacred.

Land Acquisition by Force?

Posco and Vedanta may be able to afford to see their Indian investments delayed for some time. But Tata Motors (TTM), which faces a self-imposed October deadline for the launch of the Nano, has no such luxury. The company, which declined to comment for this story, has threatened to pull out of West Bengal if the government does not work out a compromise with the villagers by early September. That may be an empty threat on Tata's part. With the plant 85% complete, Tata would sacrifice its $350 million investment there and would have to spend an additional $50 million to $100 million (BusinessWeek.com, 7/31/08) to relocate, says independent auto consultant Ashvin Chotai.

But the dust may not soon settle in Singur. At least not if those like Mahadev Das have a say in the matter. The 34-year-old farmer says he awoke one day in 2006 to find that the state government had decided to appropriate his three-and-a-half acre plot of land and add it to the nearly 1,000 acres it was giving to Tata Motors. State authorities claim they compensated farmers fairly, although the state's chief minister, Buddhadeb Bhattacharjee, admits that the land acquisition was "theoretically a forcible process."

Many in the village say they never received any money. Standing outside the gates of the Tata factory, which these days is ringed by policemen, Das contemplates his lot. "For a farmer, land is life." he says. "If you take away my land, you might as well take away my life."

Srivastava is a reporter for BusinessWeek in Delhi. With Ian Rowley in Tokyo and Moon Ihlwan in Seoul

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