This is what happened in a nutshell.
The main Nano factory was built in state of West Bengal. The communist state government (they are in power in only 2 Indian states) forcibly took away lands from poor farmers (by providing them a much lower than market value compensation) and gifted to Tatas at a far cheaper rate of what Tatas had to pay if they had built the factory in other states. (They did it to win popularity of voters as West Bengal is lagging behind other more industrialized Indian states)
Now, the displaced farmers, with the aid of opposition leader in the state, has started a violent protest against Tata and communist government.
Tata has threaten to pull out of Bengal if government can't reach a compromise with opposition party within next 2 weeks.
However, it does not mean that Nano manufacturing will stop as they already set up other plants in other Indian states but it may increase the cost of Nano as Tata already invested a lot in Bengal factory and relocation will bite their profits.
Some links
tinyurl.com/5bgk8z
tinyurl.com/6ycjpf
tinyurl.com/66jxmp
Edited by Pugugly on 29/08/2008 at 17:43
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I had also read raw material cost might push the price up too. Might not be a one Lahk car after all.
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Two parts to this story
Material cost - Tata's will be challenged by this. Their suppliers have been strung by other manufacturers like suzuki who want an explanation on how similar components will be charged a lot less in the Nano. My guess is that Tata will make money by licencing production.
Although I admire Ratan Tata, am actually relieved as the car will add to already congested Indian cities.
To the second point - the Agitation
It is claimed that the farmers have got a raw deal - but how raw is the deal and what is fair compensation? The mad lady heading the TMC (the party leading the demo) will not disclose and will not come to the negotiating table. It has come to a point where all parties are going to lose. Tata lose its investment, TMC get rubbed in it and the capitalist Marxists get portrayed as lame ducks
It is election year coming up, so the centre will not decisively rock the boat as the TMC is an undesirable ally of the Congress Party.
This should wake up all stakeholders when it comes to land acquisition. Things have not always been fair. Some planned economic zones are taking more land that would be required. Compensation is not always fair - a meagre amount and a "promise" of future employment. If a definate industrial plan is in place, that's fine.
When I visit one of our companies units located in such a zone in Chengdu, China, the farmers received a little compensation to get by and were then given apartments and/or job opportunities. They make a decent income form the rent.
Bottom line - A fair compensation and a fair future based on realistic fundementals
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