Global Economics

India: Modi Wins as Gujarat Gets Tata's Nano Plant


Gujarat Chief Minister Narendra Modi stood by as Tata announced the relocation of its Nano project to Gujarat from Singur in West Bengal

Nano, the revolutionary small car from Tata Motors has a new home. The chairman of the Tata Group Ratan Tata on Tuesday announced the relocation of the Rs 2,000-crore Tata Nano project to Gujarat from Singur in West Bengal.

Amid smiles and exchange of bouquets, the Tatas inked a memorandum of understanding (MoU) in the form of a 'state support agreement' at the Sachivalay premises at Gandhinagar. The Tatas will set up the 'mother plant' for the Nano on 1,100 acres at Sanand, about 35 kilometers from Ahmedabad. Members of the state cabinet and senior officials of the Tata group were present during the signing of the agreement. The mother plant was earlier meant to be located at Singur.

The mother plant, which will begin producing 2,50,000-3,00,000 cars per annum, has the capacity to expand its production to 5,00,000 cars in the coming years. The Tatas also have plans to build electric cars and CNG variants from this plant. The Tata complex at Sanand will initially house 60 ancillary units.

Tata Motors will take at least one year to construct the mother plant. Much of the machinery currently located in Singur will be moved to the new location at Sanand. "A lot of the assets will be relocated," Mr. Tata told ET earlier in an interview.

Mr. Tata said he plans to stick as close as possible to his deadline for launching the Nano. Earlier, the Tata Group had said that it plans to launch the Nano in October-December 2008. It is possible that this might slip to January-March 2009, a senior Tata Motor official said. The first batch of Nanos will be rolled from 'makeshift' facilities located in Tata Motors' existing factories in Pune and Pantnagar. Initial production volumes will be lower because of the delay caused by the events at Singur.

On Tuesday though it was all smiles in Gandhinagar. "This is an extremely momentous day for us. We have been through a sad experience, but so quickly we have a new home. We now have a chance (to function) in a conducive and friendly environment," said a visibly relieved Mr. Tata while addressing mediapersons in the presence of Gujarat chief minister Narendra Modi.

"Aapne aanhiya na chhiye (we belong to Gujarat)," Mr. Tata said in Gujarati while trying to trace back his roots to the state.

Tata said that the group had opted for Gujarat because it had "already lost a lot of time (in the Singur controversy) and urgency was the need of the day." "We had an urgency to move to a new location." The chairman said that the 'reputation of Gujarat' and the 'speed' at which provisions were made, forced him to opt for Gujarat.

"The land we have been provided is well located, attractive and extremely central," Mr. Tata said while adding that the final decision to move to Gujarat was taken in the last couple of days. He said that the new plant could be bigger in size as compared to that in Singur because the complex is expected to house more vendors.

"We are here to stay," he said. "We would like to be present in Gujarat in a holistic manner. Going beyond Nano, we are also planning to set up a research institute in agriculture and marine biology institute," Mr. Tata remarked. When asked what were the tax incentives provided by the state, Mr. Tata said, "They are slightly better than what we had previously."

Mr. Tata said that the 'new agreement' has been signed on an auspicious day when the chief minister Narendra Modi had completed seven years in office. The Tatas are also planning to build an auto academy and put up ITIs (industrial training institutes) for the development of human resource needed for the plant.

Mr. Tata, however, did not specify any time period when the new plant will start functioning. "It is too premature to say anything. We have to relocate equipment and have a lot of civil work," he remarked.

"There is a good M and a bad M," is how Mr. Tata chose to equate his experience with Mr. Modi and Trinamool Congress leader Mamata Banerjee.

When asked about the future of the employees hired for the Singur plant, Mr. Tata said that the employees will be given a chance and will be accommodated into the company's nearby units.

After having stolen the limelight from states like Karnataka, Andhra Pradesh and Uttarakhand, Mr. Modi said: "We are entering the automotive industry in a big way. I am not seeing this development as inflow of investments, but I feel that the coming of the Nano to Gujarat will begin a new chapter of partnership which will propel the state in a new direction of growth."

"I welcome him (Ratan Tata). For me, this project entails nationalistic spirit," Mr. Modi remarked while emphasising that the 1,100 acres allocated to Nano were at the prevailing market rates.

This project, which will help Gujarat create it's own space in surface transportation, Mr. Modi said that the state is already known for the ship-breaking industry and had the likes of Bombardier at Vadodara which manufactures deluxe train coaches.

The chief minister also related a 100-year-old incident, when Ratan Tata's grandfather, Jamshedji Tata had helped Gujarat by donating Rs 1,000 during a famine to save cattle.


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