Tata Group has found a new home to build the world's cheapest car, cosseted by assurances that the project's past traumas with land disputes and political infighting are over. By choosing to take its "Nano" car factory to the business-friendly state of Gujarat, after abandoning the original site in West Bengal, Tata has sent a message that a stable investment climate is a pre-requisite for participation in India's economic growth.
The agreement with Gujarat was formalised on Oct. 7., and Ratan Tata said the choice was largely rooted in the state's ability to provide the necessary land immediately. "Gujarat was able to define the land, secure possession of the land, the main thing, at an unbelievably fast rate," he said. "In fact, if we could move the plant in a day, we could have actually started operating here, given the fact that everything was ready.
Gujarat is one of India's most industrialized states and has a relatively sound infrastructure that has already attracted a number of multinationals.
The Nano plant will make 250,000 Nanos a year, rising to 500,000, the company says. However, it is not clear when production will begin. The group had hoped to launch the car by December at the latest, but Tata officials admitted on Oct. 7 that a more realistic timeframe lay between January and March next year. The first batch of Nanos will be rolled out from existing Tata Motors plants elsewhere in India in what Ratan Tata described as a "makeshift kind of operation."
He also insisted that the $350 million Tata had already pumped into the West Bengal plant was in no sense a write-off loss. "All the equipment will be moved, so there is no loss there. We can also retrieve and utilize a fair amount of the fixed assets," he said.
Copyright Agence France-Presse, 2008