NEW DELHI (AFP) — Tata Motors sought new sites to build its ultra-cheap car Wednesday after violent protests forced it to suspend work on the project, a crisis seen as a big blow to India's efforts to woo investors.
The company, which became globally known when it bought British luxury icons Jaguar and Land Rover earlier this year, hoped to have its "Nano" car rolling off production lines at the nearly completed plant in West Bengal by October.
But fierce protests by activists who say poor farmers were evicted to make way for the plant meant construction on the factory on the outskirts of Marxist-ruled state capital Kolkata ceased Friday, with it 90 percent complete.
Mass output of the "Nano", to be sold for 100,000 rupees, or 2,264 dollars -- billed as the world's cheapest car -- could be delayed by months if the factory is moved, analysts say.
The "Nano", with its innovative light-weight engineering, was conceived by Tata chief Ratan Tata to get poor Indians off motorcycles and into safer cars.
Talks to save the factory are set for Friday in Kolkata between the state government and the opposition Trinamool Congress, which has been spearheading the objections to the plant, a spokesman for the state governor's office said.
Governor Gopalkrishna Gandhi, grandson of Indian independence icon Mahatma Gandhi, was set to mediate in the talks. A Tata spokesman said it was not immediately known whether the company would attend the discussions.
A Tata statement Tuesday fell short of declaring the company was exiting the eastern Indian state for good. But it would be "highly optimistic to think of a (swift) return to normalcy" at the site, a senior Tata official told AFP.
Tata was "leaving the window of opportunity open" for peace to be restored but "we have no choice" except to look for other locations, said the Tata official, who asked for anonymity.
"We have a business to run, deadlines to meet," he said.
The announcement to look at sites elsewhere dismayed business leaders, who warned the hostile reception given the Tatas would hurt India's image as an emerging economic superpower and viable investment destination.
Investor confidence will be "completely shattered," said Venu Srinivasan, chairman of leading Indian two-wheel seller TVS Motor Co.
Tata's announcement also upset many residents who wanted the plant to stay because it has generated many local jobs.
On Wednesday, riot police were called out to break up clashes between plant supporters shouting, "We'll kill you if you stop the Nano" and opponents bellowing, "We want our land."
A man with two sons employed at the site also killed himself, police said.
"The suspension killed him," police inspector Raj Kanojia quoted the victim's wife as saying. The Tatas have said they will try to relocate as many employees as possible.
State Industry Minister Nirupam Sen called it "a bad day for West Bengal" and appealed to the Tatas to reconsider.
Protests have been going on for two years but demonstrations got uglier in the past 10 days with protesters besieging the factory. The plant was shut after the Tatas said it was unsafe for staff to report for work.
The stand-off reflects a wider dispute between farmers and industry over land rights across the nation.
On one side are many farmers who say they will starve without their land, while business and government say India must industrialise swiftly to create jobs to employ the army of young people joining the work force.
Tata is already facing price pressures due to rising raw material costs and other delays. A write-off of the factory, on which Tata has spent 350 million dollars, could land the project deep in the red, analysts say.
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