CONTENTS

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1 History of Tata Motors 2 Information on Origin & Background of Tata Motors 3 Tata Nano Singur Controversy Chronology of Event 4 An Interview with Ratan Tata (Published in the Economic Times 5 West Bengals Nano Impasse: A Roadblock for Tata and for Investment o Paying a Price o Political Baggage o An Impact on Investments o Multiplier Effect o Antiquated Land Laws 6 Tata and Singur Part Ways 7 Tata Nano goes to Sannand, Gujrat 8 Expert Comment: Vir Sanghvi 9 Singur locals asks Tatas to set up a Plant, offer Cooperation 10 Expert view on the Singur Saga.

Acknowledgement
I have prepared this study paper for the Tata Nano-Singur Controversy. Quite frankly, I have derived the contents and approach of this study paper through discussions with various people as well as with the help of various Books, Magazines, Internet and Newspapers and I personally went to Singur to get first-hand knowledge about the case.

I would like to give my sincere thanks to my teacher Prof. Vareen Ray, through their guidance which helped me enormously. As I think there will be always need of improvement. Apart from this, I hope this study paper would stimulate the need of thinking and discussion on the topics like this one.

Nishant Saurabh UG-1 10-13/SS

History of Tata Motors

Tata Motors Ltd. is one part of the business conglomerate, Tata Group, and was formerly known as TELCO (Tata Engineering and Locomotive Company). The other ventures of Tata Group include Tata Steel, Tata Consultancy Services, Tata Technologies, Tata Tea, Titan Industries, Tata Power, Taj Hotels, and so on. Headquartered in Mumbai, India, Tata Motors is a multinational corporation accounting for 70% cumulative market share in the domestic commercial vehicle segment. Today, the company is the worlds second largest manufacturer of commercial vehicles, worlds fourth largest truck manufacturer an d worlds second largest bus manufacturer. It is a dual -listed company, which is traded on both the Bombay Stock exchange as well as the New York Stock Exchange.

Information on Origin & Background of Tata Motors

Tata Motors was first established in 1935 as a locomotive manufacturing unit. The first commercial vehicle was manufactured in 1954, in collaboration with Daimler Benz AG of Germany. In 1960, the first truck, quite similar to a Daimler truck, rolled out from the Tata factory in Pune. Ever since its launch, the truck became highly successful. However, the success of the commercial vehicles was just the beginning of the flourishing and booming future of Tata Motors . The company went ahead diversifying itself and took up other products as well. Apart from exporting heavy duty trucks, the company decided to come up with lighter versions for the local market. Thus, began the production of the first LCV (Light Commercia l Vehicle) model, Tata 407 in 1986. In the early 1990s, the company began its expansion into the car market. Its first passenger vehicle was Tata Sierra, a multi utility vehicle that was launched in 1991. Tata came up with three other automobiles, namely, Tata Estate in 1992 (a station wagon based on the earlier Tata Mobile in 1989), Tata Sumo in 1994 (LCV) and Tata Safari in 1998 (Indias first SUV). After thoroughly analyzing the demand of the consumers, Ratan Tata, the current chairman of Tata Group, decided to build a small car, which was practically a new venture. Thus, in 1998, Indias first fully indigenous passenger car, Tata Indica was launched. It received an immediate success, since it was inexpensive and relatively easy to build maintai n. The car was exported to Europe, to UK and Italy. The second generation of Indica, V2 was even more successful. Indicas high success gave Tata Motors the financial power to take over Daewoo Motors in 2004. This gave the company an opportunity to give their brand international exposure. Today, Daewoos trucks are sold as Tata Daewoo Commercial Vehicle in South Korea. In 2005, the company acquired 21% share in Hispano Carrocera SA, earning the controlling rights of the company. In January 2008, the global automobile sector showcased the worlds cheapest car in the form of Tata Nano. Launched by Tata Motors, the car cost only Rs.1, 00,000 (US $2,500). In the March of that year, Tata Motors also acquired the Jaguar Land Rover (JLR)

business from the Ford Mo tor Company, which included the Daimler and Lanchester brands. Tata Motors formed 51:49 joint venture with Marcopolo of Brazil and came up with manufacturing and assembling fully -built buses and coaches targeting the developing mass rapid transportation systems. Tata and Marcopolo jointly have launched low-floor city buses that are widely used by Delhi, Mumbai, Lucknow and Bangalore transport corporations. Tata Motors has been continuously acquiring foreign brands to increase its global presence. The comp any operates in the UK, South Korea, Thailand and Spain. Today, Tata Motors has its auto manufacturing and assembly plants in Jamshedpur, Pantnagar, Lucknow, Ahmedabad and Pune in India, and in Argentina, South Africa, South Korea and Thailand. It is furth er planning to set up more plants in Turkey, Indonesia and Eastern Europe. ___________________________________________________________________ __

Tata Nano-Singur Controversy chronology of events

Timeline of developments at Singur, 40 km from Kolkata, wh ere Tata Motors decided to produced the world's cheapest car Nano amid protests that part of the land for the project was acquired from farmers forcibly:
May 18, 2006: Tata group chairman Ratan Tata announces small car project at Singur on the day when Buddhadeb Bhattacharya was sworn in the state's chief minister. May 25: Angry demonstrations by farmers over "forcible" acquisition of land for the Tata car project. May 26: Former West Bengal chief minister Jyoti Basu criticises Bhattacharya for mishandling issues pertaining to the acquisition of land for Tata project. July 18: Trinamool Congress chief Mamata Banerjee sows paddy near Tata factory site to protest "forcible" acquisition of land. Aug 25: Federation of Indian Chambers of Commerce and Industry (Ficci) warns that Singur developments may force industry to shift projects to other states. Sepember 25: Banerjee breaks down, says police assaulted her in Singur and shows bruises and tattered clothes to media. October 2: Bhattacharya calls for all -party meeting on Singur. October 9: West Bengal crippled by 12-hour shut-down called by Trinamool Congress. October 27: Save Narmada activist Medha Patkar holds meeting near Tata Motors factory over "forcible" land acquisition. December 2: Singur on boil as hun dreds of farmers join protests, even as Patkar is arrested by state police.

December 3: Protests intensify; Banerjee begins indefinite hunger strike. December 7: Patkar meets then president APJ Abdul Kalam over Singur. December 15: Former prime minister VP Singh meets Banerjee, asks her to end hunger strike. December 21: Governor Gopalkrishna Gandhi asks Banerjee to withdraw fast that enters 18th day. December 26: Prime Minister Manmohan Singh sends Information Broadcasting Minister Priyaranjan Dasmu nsi as emissary to Banerjee. December 27: Ratan Tata says no pulling out of Singur. December 28: Banerjee breaks 25 -day fast. January 4, 2007: Tatas select first batch of trainees for Singur project. January 10: Singur-bound Patkar detained by police in Ko lkata. January 11: Patkar released, but says she will return to Singur. January 21: Tatas start work at Singur, women torch factory fencing. February 4: Fresh violence at Singur, ahead of Trinamool Rally. February 6: Ratan Tata says clear evidence of rival hand in Singur. February 14: Kolkata court says prohibitory orders in Singur is misuse of power. February 15: Bhattacharya holds first public rally at Singur, swears by Tata project. February 23: Calcutta High Court slams state government over method adopted for Singur land acquisition. March 9: Tatas and state government ink Singur land deal lease. March 12: Farmer Haradhan Bag, who was unwilling to part with Singur land, commits suicide. March 16: Mob attacks Tata Motors' factory fencing at Singur. March 18: Explosion outside Tata Motors' factory damages fencing. March 25: Five guards at project site injured during clash with protesters. May 24: Peace talks between state government, Trinamool fail. May 25: Singur simmers as another farmer, Prasanta Da s, commits suicide. June 4: Jyoti Basu says car project does not need more than 600 acres; 997.11 acres were acquired for project and ancillary units. June 14: State government rules out returning Singur project land to farmers. July 2: Jobless Singur farmer commits suicide.

and

September 18: Tatas appoint first batch of 17 Singur youth after training. November 12: Central Reserve Police Force deployed at Singur after fresh protests. December 2: Trinamool Congress holds major rally to mark one -year of agitation. January 10, 2008: World watches in awe as Tatas unveil name for small car, say Nano will cost Rs.100,000/$2,500, excluding taxes. Singur protesters burn Nano replica. January 16: Tatas give jobs to 80 displaced farmers. January 18: Calcutta High Court says Singur land acquisition legal. February 15: Tatas announce Nano roll out by October. May 13: Supreme Court refuses to block roll out of Nano from Singur. May 21: Trinamool Congress wins majority in Singur self -governance institutions. June 27: Singur protesters break Nano factory gate at Singur. August 7: Banerjee says she is willing to talk with Tatas on Singur impasse. August 18: Bhattacharya invites Banerjee for talks. August 19: Banerjee says 400 acres must be returned to farmers. August 20: Talks between state government, Trinamool Congress fail. August 22: For the first time, Ratan Tata says Nano will move out of West Bengal if violence at Singur persists. August 23: Indian industry begins rallying behind Tata Motors factory at Singur, says continuing protests will tarnish state's image. August 23: Several states, including Haryana and Maharashtra, ask Tatas to relocate Nano factory to their territories. August 24: Trinamool Congress begins indefinite stir at Singur. August 26: Bhattacharya says acquired Singur land for Nano cannot be returned. August 27: Several industrialists, including Reliance Industries chairman Mukesh Ambani, back Tatas on Nano project. August 29: Nano factory workers stay away from work. August 31: Trinamool Congress delegation meets Governor Gandhi over Singur, who suggests mediator to resolve impasse. September 2: Cricketer and West Bengal's sports icon Saurav Ganguly bats for Tatas. September 3: Tatas suspend work at Singur, say alternative sites being examined.

September 3: Governor Gandhi plays mediator; state government, Trinamool Congress agree to meet him to end stalemate. September 4: Ratan Tata says all possible steps being taken to roll out Nano as scheduled.

_____________________________________________ _ An Interview with Ratan Tata (Published in the Economic Times)

Ever since the Nano debuted last week, Tata Motors chairman Ratan Tata has faced all manner of questions. From environmental (congestion/ pollution/emission) issues to the problems at the company's under construction plant in Singur, West Bengal. Normally reticent, he has painstakingly answered all of them. Here are some excerpts from some of the non-spec specific questions that he had to field at the Auto Expo.
The Nano project was delayed because of the political agitation and later other issues. Will Tata Motors be able to wrap things up as per schedule?And will the car itself undergo any more evolution?

There is always last minute engineering that gets done. The main issue is that we have built the plant. It was flooded earlier last year but thankfully before the machines and equipment were installed. The water receded and construction is now on in full swing both from our side as well as the vendors. The problem in Singur was not of our making, It was unfortunate. I hope we can improve the quality of life in the Hooghly district as a good corporate citizen should. We have already started to do that and I hope the plant will attract more industries and create more job opportunities for the local populace.
Isn't the Nano very cramped on the inside?

A small car is a SMALL car. If one is looking for a limousine this is not the car to buy. If one is looking for a three -box sedan, this is not the car to buy.
How eco friendly will this vehicle be?

We've not made a claim to be the most eco -friendly in the world. We are in compliance with emission norms in India and this current engine meets BS3 and is capable to being scaled up to Euro 4 as well. There is a c ost attached to being a totally green car. At the end of the day, all the things you ask for may not be there in this vehicle because we had a cost target. And that would include some of the green stuff as well.

Will the margins make sense on this car? Will you make money on the Nano?

We are a socially responsible company but we are not a philanthropic trust. We will make profits. As for margins there would be several uptrim versions and we will have our margins spread over those versions.
There has been widespread apprehension that this car would create congestion because of its sheer numbers...

All the question of congestion implies that we will seek the global market with millions of these vehicles. We don't have the resources to do that. But we are country of a billion people. Most Indians are denied connectivity and this is a way.
But India's roads are in terrible shape already. Can they take another 250,000 units of this car? Isn't a more efficient public transport system the answer? It took me one hour to go from south Delhi to Pragati Maidan today and the traffic was a nightmare...

India desperately needs a mass transport system and better infrastructure. But those are issues that we don't deal with. I would be concerned if our vehicle cre ated absolute chaos all over India. If you faced chaos today it did not include these vehicles...so clearly there are other issues involved. But my point is should the masses be denied their individual transportation rights? This car is not a targeted at a particular segment of consumers. But having said that I hope it will change the manner in which one travels in semi urban and rural India.
Now that your dream project has rolled out, time for you to retire and do the things you have always wanted to d o?

Everybody has a desire of stepping aside, of wanting to do what one always wanted to do, to change gears. I have some responsibilities which I have to fulfill before I do that.
Will this car give established players in Europe, Asia and US the heebie jeebies?

I don't think anyone should have sleepless nights. This was achieved by a bunch of young engineers. And if we could do it, it can be done by anyone, probably better. The largest element of cost in a car is material cost. India is not the cheape st on that count due to the tariff structure. But labour is inexpensive and productive. And engineering inputs are very viable.

How can a company that makes the world's cheapest car bid for two of the most expensive and exclusive marques in the busine ss, Jaguar and Land Rover? Where is the fit?

Everybody seems to imply that if you are at the low end of the market, how can you look at high-end cars. But no one asks Unilever for instance how they can make and sell cheap soaps in India or Africa and als o expensive cosmetics elsewhere in the developed world.
But the rating agencies have given a thumbs down to the Jaguar -Land Rover deal...

Rating agencies have a clinical, mathematical view of things. That's what they do. So that's alright.
Will the Rs 1 lakh price tag increase? Is this is an introductory price?

No it is not. The price we have announced is the price we are launching the car at.
Does that mean the price will remain constant?

I never said the price will never rise. But I cant say if it did, when. I remember when the Maruti van was first launched I bought one of those for Rs 50,000. I used it for many years. Of course now that product is not available at that price.Our endeavour with the Nano will be to hold our price as much as possi ble.
How is Tata Motors getting ready to handle the exponential increase in volumes that this car will bring?

The Nano project is not a separate entity. With the Indica it was an issue because we were getting into cars for the first time from being a tr uck player. Now it's a question of simply expanding that infrastructure.
The car was earlier supposed to come with continuously variable transmission but has now come with a 4 -speed manual...

The CVT is not ready for unveiling. But it will be there. We are working on it.

Tata Nano Pros and Cons

Pros and cons of Tatas $2,500 Peoples Car

Indias Tata Motors Ltd unveils the worlds cheapest car in New Delhi on Thursday 8 Jan 2009. Dubbed the Peoples Car, it will sell for about 1 Lakh and should be in Booked by April Following are some of the pros and cons that supporters say could revolutionise the transport scene in India.
Safer Than A Scooter - Indian consumers bought about 7 million two -wheelers and 1 million cars in 2006/07. Tipping the ratio from scooters to cars, and so improving public safety on Indias crowded and sometimes chaotic roads, was one rationale for creating the Peoples Car, according t o Ratan Tata, the companys 70 -year old chairman: - Thats what drove me - a man on a two-wheeler with a child standing in front, his wife sitting behind, add to that the wet roads - a family in potential danger, Tata wrote on the company Web site. The Price - Retailing for 100,000 rupees (or one lakh), Tatas rear -engine, 4-seater is expected to put automotive ownership within the grasp of the millions of young families who make up the countrys aspirational middle class. - At that price, it will cost less than half the cheapest car on the market now, the mini Maruti 800, and more than double an entry -level 100cc motorbike. Small cars, for years the best sellers in India, are being touted as a new global trend, with Renaults Logan entering new markets and Indias Bajaj Auto, Renault and Nissan looking into the feasibility of a $3,000 car.

Jobs - The Tata group chief has said the car will be manufactured in three to four locations, including West Bengal and Uttarakhand states. A plant in Singur, in eastern West Bengal state, is expected to employ 10,000 people. Protests - Farmers and activists staged violent protests at Tata Motors Singur plant last February, saying local people were forced off prime farmland to make room for the plant. The government says it has compensated most of the affected farmers. Environment - Environmentalists worry that a car so cheap could lead millions down what they see as the wrong road, with soaring car ownership damaging the environment and locking India into greater dep endence on oil. India imports 70 per cent of its crude oil. - Indian climate change expert R K Pachauri, chairman of the Intergovernmental Panel on Climate Change, says the One Lakh Car is giving him nightmares.

Source: - Economic Times

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West Bengal's Nano Impasse: A Roadblock for Tata and for Investment
The slogans on signs in Singur -- the West Bengal site where Tata Motors plans to manufacture the Nano, its $2,500 small car -- say it all. Most are in Bengali, but the few in English capture the overriding sentiment. "Nano No No," reads one. "Atta not Tata," says another. Atta, which is flour made from whole wheat, refers to the core question of the dispute: Should fert ile farmland be requisitioned for industrial purposes? Does food get priority or factories? According to faculty at Wharton and the Indian School of Business, the impasse over the plant in West Bengal threatens to increase the Nano's production costs and could delay its entry into the domestic market. Moreover, they say, it will likely impact investment in the region, as outside companies shy away from antiquated land laws and political disruption. As things stand today, work has been suspended at the Nano plant. Tata has closed shop because, as chairman Ratan Tata told journalists in Kolkata (formerly Calcutta): "I can't bring our managers and their families to West Bengal if they're going to be beaten, if there is going to be violence constantly, if their children are afraid to go to school." Tata has faced trouble ever since it got the go -ahead for the plant on May 18, 2006. Just a week later, there were angry demonstrations by farmers objecting to the "forcible" acquisition of land for the project. The Tr inamool Congress, a political party led by Mamata Banerjee, who has been spearheading the agitation against the Left ruled West Bengal government and the plant, even staged a hunger strike.

Matters came to a head recently, with the Nano due to roll out in October this year. On August 24, the Trinamool Congress started an indefinite protest at the factory gates and stopped all access to vehicles. On September 3, Tata suspended work and said it was evaluating alternative sites outside West Bengal. Since then, the Trinamool Congress has called off the protest on the basis of unspecified promises by the state government. Talks have been held between the two sides, though Tata Motors has been left out of the discussion. In a statement on September 8, the Tata Gro up said: "Tata Motors is distressed at the limited clarity on the outcome of the discussions between the West Bengal state government and the representatives of the agitators in Singur. In view of the same, Tata Motors is obliged to continue the suspension of construction and commissioning work at the Nano plant. We will review our stated position only if we are satisfied that the viability of the project is not being impinged, the integral nature of the mother plant and our ancillary units are being maintained, and all stakeholders are committed to develop a long term congenial environment for smooth operations of the plant in Singur." Jitendra Singh, a Wharton management professor who is curren tly dean of the Nanyang Business School in Singapore, characterizes the standoff in Singur as "essentially political blackmail." He says the issue is broader than how it will impact Tata's ability to deliver a $2,500 car. "While India has made a great deal of progress and the economy is doing well, the weak leg continues to be its political system," he says. There may yet be a face-saving formula worked out and Tata could resume operations. But it is clear that trouble will strike again. The first Nano will roll out of some other existing Tata Motors location. The plant in Singur, even if it goes through, will play second fiddle. Some are more optimistic. "I don't think that the Tatas will actually pull out unless the situation worsens a lot," says Rajesh Ch akrabarti, assistant professor of finance, at the Hyderabad-based Indian School of Business (ISB). "I think they will find a solution."

Paying a Price
If Tata Motors does pull out of Singur, it could cause the project cost to increase and therefore impact the company's ability to produce a low-cost car. But other factors have also changed in the external environment, points out John Paul MacDuffie, Wharton management professor and co-director of its International Motor Vehicle Program. "A lot of things have happened to threaten the $2,500 price point," he says. "Commodity prices have been going through the roof, and there are other cost increases that are going to affect everybody. The real ques tion is: What cost increases are idiosyncratic and distinctive only to Tata that might erode any kind of advantage they have?" Singh agrees that the current crisis will eventually show up in the cost of the car. But he says he wouldn't be surprised if Tata pulls out. "Of course, it will cost them to do that, but better to do it now than to be open to blackmail in the future. There will be a

one-time relocation cost, but I'm sure he will find another state willing to take the project." MacDuffie believes the new costs brought on by the Singur standoff could compel Tata to take a second look at its competitive edge in the domestic Indian market. "There may be some Maruti products at the low end of the market that will continue to be very strong price competitors because they have such high volume and they have long-established facilities, which are probably all paid for in India," he says. Maruti will be the one to contend with as Tata tries to rein in the Nano's costs. "Suzuki, Maruti's parent and the source o f the design, is renowned in Japan for having extremely cheap designs and extremely cheap tooling, and they are very effective in running on the edge of what keeps things from breaking down in order to [have] a cost competitive position in the Japanese market," says MacDuffie. "That know-how will make Maruti a formidable competitor at the low end of the market." MacDuffie suggests that Tata needs to focus on limiting the Singur damage to Nano's costs even as it fights competition on other fronts. "If they can keep these idiosyncratic cost increases from becoming too large and avoid too much delay, and also avoid too much publicity that tarnishes them in a reputational sense, they should be in a good position for the Nano to have a large impact first in India ," he says. Success in the domestic market is crucial to the Nano going global, says MacDuffie. "Being successful in other developing markets probably is dependent on a successful launch in India first for all sorts of reasons. [The Tatas] need the volume, they need the experience, they need the publicity of that success to come into other markets where they will face domestic champion competitors." But the Singur problem seems to have no easy resolution. Tata has been given 997 acres of land, acquired by the state government under the Land Acquisition Act of 1894. (This was challenged, but the courts have ruled that the acquisition is legal.) Of this, some 645 acres is for the mother plant and another 290 for a vendor park which will host various ancillary units for the Nano. The remaining 60 -odd acres are with some state government agencies. The Trinamool Congress and its partners were, in the beginning, opposed to the entire acquisition. Today, it has no problems with the mother plant. But it wants the vendor park moved elsewhere and the land returned to the farmers. Tata, on the other hand, says that the economics of the project won't work if the ancillary units are moved out. The Rs. 100,000 Nano would end up with a heftier price tag. "As part of the proposed integrated auto cluster in Singur, about 60 key auto ancillary suppliers to the Nano have taken possession of land in the integrated complex and have invested about $110 million towards construction of their plants and procurement of their equipment a nd machinery," says a Tata statement. "The project's auto ancillary partners, who had commenced work at their respective plants in Singur, were also constrained to suspend work in line with Tata Motors' decision." Tata has also made significant investments. But Ratan Tata is prepared to write them off. "If anybody is under the impression that because we have made this large

investment of about Rs. 15,000 million ($328 million), we will not move, then they are wrong," he told the Kolkata Press conference.

Political Baggage
Speaking to a Tata Group magazine last year, Ratan Tata elaborated on how the Singur problem evolved. "I think Singur has been an exceptionally unfortunate and unique situation," he said. "The probl ems there are mainly political -- between two political parties -- and we've been caught in the crossfire. The land acquisition was not our doing; the West Bengal government managed that. There was no problem when it was offered to us or when we accepted. Singur becoming an issue was an out-of-the-blue happening. The solution lies in sitting down with the state government and talking about compensation, retraining, reemployment and the rest, with Tata Motors being made a party to this activity. Instead, what we've got is a chorus of negatives, loose talk of returning the land, women and children blocking roads, and guns, bullets and firings." The state government has offered to provide 400 fertile acres elsewhere in the state to the agitating farmers, but th ere are no takers. Banerjee, herself, believes she is on a winning horse politically and is not prepared to make any concessions. In 2007, she had witnessed the popular appeal of the land issue when trouble broke out over a proposal to set up a chemical hu b over 14,000 acres in Nandigram, a rural area 70 km from state capital Kolkata. This was to be situated in a special economic zone (SEZ), a 50:50 joint venture between the state -owned West Bengal Industrial Development Corporation and the Salim Group of I ndonesia. It was once again Banerjee's Trinamool Congress that campaiged against land acquisition. The protesting villagers and farmers took over administration of the area, under the banner of the Bhumi Uchhed Pratirodh Committee (Committee against Land Evictions). On March 14, 2007, some 4,000 armed policemen were ordered to move in. At least 14 people died in clash. The site of the proposed chemical hub has since been moved from Nandigram. Meanwhile, in subsequent elections to the zilla parishad (a district-level governing body), the Left was badly beaten by the Trinamool -- the first time in 30-plus years that the Marxists have lost in the region. "All players are trying to revise their understanding of the ground realities based on what they have witnessed in the past few weeks," says Chakrabarti of ISB. "It is a political-economy kind of problem." He adds, however, that part of it is also pure saber-rattling. "The companies are just taking a stance and putting pressure on the political players because they know that the politicians want their investments." There have been no corporate casualties as yet, but there are some indicators of trouble. "We are yet to take any decision," says Infosys director of human resources T.V. Mohandas Pai. "We will have to relook and rethink because we are concerned about the safety of our employees." Infosys, the country's second -largest information technology company, has been planning to invest $110 million on a software development park near Kolkata. It has yet to recei ve the 80 acres promised by the state. The Times of India reports that another IT giant -- Satyam -- has decided to pull out of a special economic zone (SEZ) it was planning to set up in West Bengal.

"What impact this episode has on other corporate investments into West Bengal depends on what stage of finalization their plans are in. But it will certainly be a dampener on new players coming into the state, especially because the controversy has been [going on] for such a long time and has also gotten so much publicity," says Chakrabarti. "At the same time, one also needs to realize that not all investments require large amounts of land. Also, there are other players who have done their own land acquisition without getting the government involved. It i s only when the industrial players try to cut a deal with the ruling government and the opposition manages to launch a strong enough protest that all hell breaks loose."

An Impact on Investments
India Inc. is worried about the impact on investment flows. A ccording to a statement by Reliance Industries chairman Mukesh Ambani: "A fear... is being created to slow down certain projects of national importance. The Nano project is a unique and innovative initiative which will establish India's position as a small car hub. Indian Industry must be encouraged to make such large investments in order to build the country's competitiveness as well as support job creation." "The Nano car is a statement of the coming of age of Indian manufacturing, and places India's innovation skills high up on the world map," says Jamshyd Godrej, chairman and managing director of Godrej & Boyce and past president of the Confederation of Indian Industry (CII). "It is, therefore, very unfortunate that the entire project is facing a politic al situation which it does not warrant." Nano's moving out would be a setback for not just West Bengal but also the entire country, says Godrej. Adds CII chief mentor Tarun Das: "The adverse impact is not restricted to Singur or West Bengal but will resona te in India's global image." "Any delay will jeopardize the general investment climate in the country by undermining the confidence of foreign investors in the present difficult times, when a severe recession is threatening the global economy," says Indian Merchants Chamber president M.N. Chaini. Even Union Commerce and Industry Minister Kamal Nath is concerned about the impact on investor confidence, particularly in West Bengal. "We have to attract investments," he says. "Incidents and such events obviousl y shake the confidence of the investor, especially in the particular state in which it is." India hopes to get $40 billion in foreign direct investment (FDI) this year; in the January -June period, the actual FDI inflow was $20 billion. Will the Nano effect impact this? "While the Singur issue has made headlines the world over, I don't think this will be a very major issue at an international level," says Chakrabarti. "Many other states have invited the Tatas to set up the Nano plant."

Multiplier Effect
Will the Nano's problems hurt the Indian automobile industry and its ability to fuel economic growth elsewhere as in the U.S. or other developed economies? MacDuffie feels that while the two situations are not strictly comparable, there could

be lessons for India in the area of infrastructure investments. "A lot of what made that multiplier effect possible in the U.S. post -war economy was the decision by the federal government and the willingness to use some of the riches of those post -war years to invest very heavily in infrastructure. That allowed the car to have a transformative impact on a lot of the economy, on where people lived and on how they spent their leisure time and the like," he says. MacDuffie points to the construction of the U.S. interstate high way system as one of the most visible manifestations, adding that many other public investments increased the economic feasibility of dispersed growth into the suburbs possible. "There were deliberate choices to invest in infrastructure for the automobile rather than for mass transit and railroads and such -- of course with the auto companies trying to influence that. If the government of India really wanted to gain that kind of multiplier effect they would need to be willing to make similar investments in infrastructure." Even as the controversy was at its height, non -resident Indian (NRI) and steel baron L.N. Mittal was holding a meeting of the company's top managers in Delhi. "One can face this kind of problem in any other country," said Mittal of Singur. "But the country as a whole is interested in growing. [Singur] does not give us nightmares. And we will not revisit our plan in India because of the Singur episode." Mittal admitted, however, that his projects were facing some roadblocks. He plans to set up two integrated steels plants in the states of Orissa and Jharkhand. But land acquisition, mining permissions and other approvals have kept the projects on the drawing board. The cost of the plants, announced in 2005 and 2006, has ballooned from $20 billion to $30 billion. "The more the delays, the more the cost overruns," says Mittal. Another NRI, Vedanta Resources chief Anil Agarwal, has also expressed his confidence in India. He has just announced a $9.8 billion global investment plan; of this, $7.6 billion is earmarked for India.

Antiquated Land Laws

But even as the world keeps knocking at India's doors unfazed by Singur, there is a larger question that the controversy has given rise to: the whole issue of land acquisition. "We certainly need to revisi t the land acquisition law," says Chakrabarti. "It is very antiquated particularly because it does not take into account major projects that change the value of land dramatically. The current law still works fine if one wants to build a road or railway tha t needs just a small stretch of land, but it does not fit the current situation of acquiring land for industrial purposes." The law dates back to 1894; although there have been amendments, they have clearly been inadequate. Companies and governments have t aken their own route, depending on circumstances. The Jindal Group, for instance, is setting up a steel plant in Salboni in West Bengal. It has paid compensation up front. It has also offered free shares in the new company to all the people dispossessed of their land. Sajjan Jindal, vice -chairman and managing director of JSW Steel, says that had he been in Ratan Tata's shoes,

he would have offered the recalcitrant farmers double their holdings nearby. But Jindal had it relatively easy. At Salboni, some 90% of the 4,800 acres required was already with the state government. It was possible to be more than generous with the other owners. Yet, despite their very high standards and ethics, the Tatas seem to have been embroiled in more than their fair share of lan d acquisition rows. Among projects in suspended animation or abandoned are a $550 million titanium project in Tuticorin in Tamil Nadu, several projects in Orissa steered by Tata Steel, and a port in the same state in partnership with engineering giant Lars en & Toubro. At Kalina Nagar in Orissa, where a $3.4 billion steel plant has been planned, there were violent clashes between the police and tribals. Some 14 tribals were killed in police firing in January 2006. (Incidentally, in July of this year, the Tat as also pulled out of four major projects in Bangladesh, which borders West Bengal. The $4 billion plan had made no progress since proposed in 2004.) For the Tata Group, the sun is setting in the east. MacDuffie recalls another such crisis in Brazil in the mid-1990s, when the rules of the game suddenly changed for the automobile industry. Encouraged by strong economic growth at the time, the Brazilian government offered favorable tax treatment to small cars with engines below a certain size. "Suddenly, that part of the market just took off," he says. "All of these multinational companies came flooding in to build capacity in Brazil." According to MacDuffie, a wave of optimism ran across the global automobile industry that Brazil would go on to offer generous government subsidies to open new plants. The unions too were willing to be "somewhat flexible in allowing innovative work arrangements," he recalls. "Suddenly there were multinationals that were trying out innovative production concepts in Brazil that the y hadn't ever tried in their home countries. Volkswagen opened what they called a modular factory and General Motors followed suit with something similar." All that enthusiasm was short-lived, and the Brazilian government withdrew those incentives. Havoc followed. "In a very short period of time, lots of companies had all these unused capacities," says MacDuffie, adding that the momentum was such that the investments kept pouring in even after the favorable market conditions shifted. "They just couldn't shift gears quickly enough to withdraw and the consequences were paid later." Among the casualties in Brazil was a joint venture Chrysler and BMW had formed to build an engine plant, MacDuffie notes. "That got started late, and it just absolutely never got off the ground and eventually it was closed and all the equipment was sold to a Chinese firm." In India, other business houses are also facing unexpected changes in the playing field after making initial investments in projects. South Korean Pohang Steel's $10 billion steel plant at Jagatsinghpur has run aground over acquisition of forestland. Goa has scrapped all the SEZs -- 15 had been planned -- after agitators against the takeover of farm and forest land threatened to target tourists, the lifeblood of the state. The same scene is being played out in many parts of the country. In early

September, villagers in Potka (Jharkhand) humiliated and publicly paraded surveyors of Bhushan Steel & Power. The company wants 3,400 acres for a proposed steel and thermal power project. "The crisis faced by the Nano project will certainly lead to major problems with other mega projects, like the $2.7 billion Nandagudi SEZ in Karnataka, the $6.6 billion Raigad SEZ in Maharashtra, the $2.6 billion Dadri (power project being implemented by Anil Ambani's Reliance Energy) in Uttar Pradesh, the $8.7 billion Gurgaon -Jhajjar (gas pipeline project) in Haryana, and the $8.8 billion (Arcelor -Mittal) Keonjhar project in Orissa. India at this stage can ill -afford such a loss," says Chaini of IMC. There are no easy answers. In Maharashtra, at the Reliance SEZ project in Raigad district, a referendum is being conducted in 22 villages. Farmers will be voting on whether to give up their land. Reliance wants 25,000 acres for this mammoth project. The polling is a state government initiative; as with the Tatas at Singur, Reliance has been kept out of the loop. Reliance has been negotiating with the farmers on its own, unlike at Si ngur where the state government is doing the job. As with Singur, one of the issues is compensation. Reliance is offering Rs. 1 million ($21,900) per acre; the farmers say the land is worth four times as much. In Singur, farmers were paid $18,600 per acre of single-crop land and $26,250 for double-crop land. That was a premium, to-the-market rate. But, with the Nano plant making progress, the rate shot up to $87,500 per acre. The farmers feel they have been taken for a ride. Every project that involves land acquisition will, going forward, most likely face resistance; farmers will hold out for a better deal. In Singur, only 1,200 farmers out of 12,500 with less than 300 acres have not accepted the compensation. According to Jindal of JSW, this is the reason dispossessed farmers should be made shareholders in the project. Tata has offered jobs and training, but that is clearly not enough. The Singur controversy continues, and agitation is likely to resume.

Tata and Singur part ways

Ratan Tata has announced that Tata Motors will move the Nano plant out of Singur. This decision has been taken in the wake of strong protests from the opposition led by Trinomool Congress (TMC) leader Ms. Mamata Banerjee. Mr. Tata very categorically has named the opposition and Ma mata Banerjee in particular for the decision. In Singur the farmers have expressed deep regret at this decision and called a protest blockade of the Durgapur Highway to make themselves heard. This is the situation in ground zero as of now. Like many bloggers I have too taken a stand favoring the factory at Singur and I still believe that a Tata factory in rural Bengal will transform its topography for the good as it has been for Jamshedpur. But then I cannot refrain from criticizing the CPM governments policies and methods of land acquisition here. See living in Bengal I know more than any outsider the kind of dirty politics the Left has played in West Bengal for the last few decades. Today we are taking a favorable stand towards them only because we are seeing the problem from one dimension. One one hand there would have been jobs for many youths after the factory would have been set up but then wouldnt it be better if the government would be more systematic in procuring the land? An example has been set u p by the Ambanis who sought a majority vote from farmers and land owners of an area in Maharashtra before going about acquiring land. The CPM in Bengal have undoubtedly used ruffians, as is their trademark, to take land by force. IN so many decades of rul e the party had not the sense to draw up a land map of the state of Bengal. You cannot take land at your whim. The Left now is playing at popular emotions and public support for not the government but the Tata business house. Ratan Tata is highly respected by everyone and thats why people are sympathizing with him. The CPM cannot say that it has supported industrialization in Bengal. For that matter we cannot say any political party has thought for the betterment of Bengal. The politics of bandhs and dharn as and unionization has closed most jute mills and factories of Bengal. In more recent times I can quote the opposition of departmental and convenient stores by the Left parties in Bengal. The Forward Bloc, the biggest supporter of the CPM government in Be ngal, had recently tried to prevent issuing an agricultural license to the German company Metro Cash and Carry. The company in question is another store that will stock agricultural products which theyll buy from the farmers. Forward Bloc say they always protested issuing license to such departmental stores as it will be detrimental to the corner grocer store and the road side illegal vendor. Only after the intervention of Buddhadeb Bhattacharya, after the German Ambassador threatened dire consequences and Lufthansa said they would exit, did the Forward Bloc controlled Agriculture Board relent. So my point is that this sudden holier than thou attitude of the CPM is really a farce. The CPM and TMC are all actually two sides of the same coin. They are fighti ng a political battle here before the elections and the Tatas have been caught in the crossfire. When Bengal today thinks about the Singur problem let her remember to look at both sides of the dispute and then voice an opinion. Lets not condemn what happened but analyze and see how the government could have avoided this fiasceo from occuring. In doing so lets keep in mind the destructive politics the Left has played in West Bengal and that it upholds the same bandh centered tactics even today.

Tata Nano goes to Sanand, Gujarat

(Wednesday, October 8, 2008)

West Bengals loss is Gujarats gain. It was announced yesterday that the Tata Nano project for the Nano ultra-cheap car would move to Sanand, Gujarat. Gujarat chief minister Narendra Modi has rolled out the red carpet for the peoples car.

Ratan Tata chose Sanand, 30 kms away from Ahmedabad, for the Tata Nano project after examining possible locations in Maharashtra, Uttarakhand, Karnataka and Andhra Pradesh. The overall clicmate in Gujarat has bee n extremely favorable to industry. That, and the fact that the general populace of the state is in favor of industrialisation were important factors in enabling Narendra Modi to allocate 1100 kilometers for the Nano project. The Tata Nano project location in Sanand boasts of close connectivity to National Highway-8 connecting Rajkot and Ahmedabad. The Nano site is also close to the proposed Dholera port, which is being set up as an industrial development project as

part of the implementation of Delhi -Mumbai freight corridor. This could mean that if the Tatas need to export the Nano, they wouldnt have to go far. Equally exciting for the Tatas is the reception the company has got from farmers who said they were ready to give their land for construction of ap proach roads to the site. The land made available to Tata Motors is from the Anand Agricultural University. The Sanand plant will also have the convenience of being close to Rajkot where a slew of Nano components would be made at different ancillary units. Unlike the situation in Singur, local people and the political leadership expects all that is good to come to their doorstep as the chance of a boom in economy is more that they ever thought as the Nano gets ready for the roll out. The Nano project in San and will have the manufacturing capability of 250,000 cars in a year initially. Ratan Tata expressed his happiness at things moving so quickly after the disappointment of Singur, West Bengal where the protesting farmers affiliated to the opposition Trinamool Congress party successfully froze the project. The benefits offered by the Gujarat government to Tata Motors are slightly better that what the West Bengal government offered to Tata Motors, he added. It may take Tata Motors a bit of time to set up the p lant in Sanand, and commence actual manufacturing. Meanwhile, Ratan Tata said the company would try to meet the production deadline for the Nano small car it is believed that the initial Nanos would be produced at the Pantnagar plant of Tata Motors, and production would shift to the Sannd plant only after the plant is set up and the ancillaries manufacturers have succesfully moved in and started operations too. Initially, Sanand would see production of the petrol Tata Nano cars, and later more variants, such as diesel, electric and CNG versions of the Nano would be produced here.

Expert Comment : Vir Sanghvi

Nobody disputes that, during his lifetime, JRD Tata was the most respected and probably the most admired businessman in India. On Thursday, as I watched the TV coverage of Ratan Tata unveiling the Tata Nano in New Delhi, I was struck by a sudden thought: Ratan has finally inherited JRDs title. He is clearly the most respected and admired businessman in India today. And then, I thought back to that phase, 10 years ago, when the Tatas struggled to reinvent themselves in the post-JRD era. I thought of how Ratan was perceived then: awkward, untalented, unworthy of the job, out of his depth and full of vindictive anger against many of the satraps of the JRD regime. It was a time of change. New groups were springing up out of nowhere. The certainties of the old protectionist economy and the license -permit-quota raj had collapsed. Reliance had made the transition from being seen as a parvenu to being regarded as an industrial behemoth. The Infosys legend, personified by Narayan Murthys personal simplicity and marked by the world-class skills of his high-tech partners, had just begun. At Tata headquarters, however, the crises mounted: record losses at Tata Motors, the much-derided plan to launch the Indica, criminal charges over Tata Teas alleged links with Assam militants, allegations of foolishness in the sale of Tata Oil Mills assets, a plan to launch a domestic airline with Singapore Airlines that was comprehensively scuttled and more. And many of us wondered if we were watching Indias greatest industrial group diminish before our very eyes. The house that JRD had built was crumbling. Poor, shy, inept Ratan seemed unable to cope. And yet, a mere decade later, here was the same Ratan being feted by the worlds media as the man who reinvented, if not the wheel, then certainly the motorcar. A man who did what no global carmaker believed was possible: to build a car that looked this good and drove so well for so low a price. And here was a new Ratan, his legendary shyness temporarily in remission, as he joked about calling the car the Pachauri (after the environmentalist who chose to attack the Nano as a pollution threat, a charge that the Nano has easily beaten) or even the Mamata (after the nutcase) or Despite Mamata. The following day, the Nano managed the impossible: there was not one negative review of note and the raves kept coming. To the chagrin of his rivals, Ratan even kept to the price commitment. Though input costs had gone up, he said, the Tatas would still price the basic Nano at a lakh because a promise is a promise. The triumph of the Nano was merely the crowning glory in a series of successes. Throughout the 21st century, the Tatas have beaten every doom-laden prediction and silenced every critic. Tata Motors came back from losses of over Rs 600 crore to make huge profits on the back of the Indica, the all -Indian car that had been Ratans dream, and to his detractors the vanity project that would sink the company. Infosys had fulfilled its early promise but even then Tata Consultancy Services

(TCS), a company that had been little noticed in the 1990s, had grown to dominate the Indian IT sector, its size dwarfing Infosys. Tata Steel had defied Rusi Modys predictions, had been whittled down to a slim and lean company, and had even gone ahead and bought Corus, a global giant, after a bidding war during which Ratan had shown nerves of steel. And even as Ratan was unveiling the wor lds cheapest car, the Tatas were on the verge of clinching the purchase of Jaguar, one of the worlds great luxury cars. How had so many people, who should have known better, got Ratan so wrong? Business pundits will tell you in the kind of detail that I will never be able to master just how the Tatas turned themselves around. Im sure they are right. But remember, most of these pundits were the same guys who wrote Ratan off to begin with, a decade or so ago. I have a few theories of my own based on the interviews I have done with this otherwise reclusive man on the remarkable rise of Ratan Tata.
y

Ratan realised India was changing much before the other big houses did. He recognised that the old feudal, paternalistic structure that had worked so well in the JRD era, where the old man was the emperor and the companies were run by viceroys, would not work in the new India. He professionalised the Tatas, democratised the management, abandoned the feudalism (remember Rusi Modys massive birthday tamashas in Jamshedpur?) and made the group adopt a low -key, matter-of-fact, get-things-done style that had no room for satraps and stars. He saw the wisdom of embracing the future. Hence, the focus on TCS. And hence the determination to go global: we talk about C orus, the Pierre, Tetley etc, but the big successes are only the tip of the iceberg. Years ago, Ratan told me that he was determined to use Indian managerial ability and Tata capital to globalise the group. In 2000, this seemed overly ambitious and grandio se. But he has grabbed the opportunities for globalisation like no other Indian industrialist has. At the same time, he put his faith in young India. The team behind the Nano is young the top guy is 35 and overwhelmingly Indian. So it was with the Ind ica, a truly Indian car. One of the dichotomies of Ratans personality is that while he can be shy and reticent in social situations, he is warm, outgoing and able to motivate teams at work. He told the government to go to hell. No group has faced more un fair governmental harassment than the Tatas right from the Tata Tea case where they were framed by the Assam government to the telecom tangle where they were bullied by an arrogant Dayanidhi Maran. Not once did Ratan agree to pay a bribe. He wouldnt even go and complain to Manmohan Singh (who has immense respect for him). Instead, he stood his ground. If in the process, he lost a project, he lived with the loss but maintained his principles. So it has been with Mamata Banerjees foolish Singur campaign: he will never buckle under it or try and buy her off. He let his heart guide him. Early in his career, when Nani Palkhivala persuaded the Tatas to liquidate the Central India Mill even though it could have been turned around with an infusion of just Rs 50 lakh, an angry and disgusted Ratan gave his own annual Tata salary bonus to the officers of the company. They were perfectly blameless people who had now lost their jobs through no fault of theirs because of a

bad corporate decision. They had homes to ru n and children to educate, he remembered in an interview to me in 2005. It was his heart that told him to build the Nano. He would see families of four on a single scooter. The father would keep his son in front and the mother would hold on to her baby. He wondered why it was not possible to give such families a car where they could be safe and comfortable for the same price. Plus, they would keep their dignity. There are many reasons for building a car. But this, I think, is the best one of all.
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And finally, I think, India caught up with the Tatas. Over the last decade the middle class came of age, tired of the crony capitalism of the old bania class, was inspired by engineering success stories like Infosys and began to wonder why it wasnt possible for everyone to do business honestly. The Tatas had gone through good times and bad times. But they had always given nearly all of their profits to charity. They had consistently refused to break the law and encourage corruption. Older generations of busine ssmen thought they were silly and shortsighted to do so considering that everybody else played the game. But now India has changed. We finally have a strong and vocal middle class that prizes honesty above all else and that has contempt for the sleazy poli ticians and the crony capitalists of old. When we see Ratan Tata refusing to pay bribes, refusing to lick politicians boots and refusing to bend the rules and still taking the Tatas from strength to strength, still buying the worlds best companies, and still reinventing the rules of the car industry well then, we know that there is a better way. Its possible to be honest and principled. And still beat the rest of the world. Thats the strength of the new India

Singur locals asks Tatas to set up a plant, offer cooperation

Press Trust of India / Singur January 4, 2011, 11:54 IST The locals of Singur have assured Tata Motors of full cooperation for setting up a plant, prompting the industrial giant to consider meeting the representatives in this regard. Tata Motors has indicated it will meet Representatives of landlosers who had given land for Tata's Nano manufacturing plant before the company withdrew from the state in 2009 following violent local protests. They were seeking higher land price besides other demands from Tatas'. "I can call on you during one of my visits to Kolkata", Tata Motors Vice President (Govt Affairs and Collaborations) A S Puri said in his response on December 9. He was responding to a letter by president of the Singur Shilpa Vikash Unnayan Committee, Uddayan Das, apprising him of the locals' changed attitude towards Tata's enterprise. Das had written to the Tata Motors on November 11, saying the situation has undergone a change since t hen. He had said that while the company's assessment that the situation at Singur was not favourable as yet for industrial activity was true, "this was correct to some extent till December 2009." However, Das said, the situation had changed since then and the people of Singur would now support and cooperate for renewed industrial activity. "We never thought that inspite of completion of 85 per cent of total project work, you would take such a painful decision to close the (Nano) project", he wrote. The response of Tatas' has kindled rehabilitation hopes among members of committee of land-losers formed by the CPI(M) after the exit of Tata Motors' Nano project from Singur in Hooghly district more than a year ago. He said that the people of Singur wanted T ata Motors to do something on the acquired land, which could be a car project or something else and sought a meeting with the company to explain the current scenario there.

Expert View on the Singur Saga

(Arya Rudra)
arya rudra

to me
"Tata Nano & The Singur- Saga"

show details 10:58 am (1 day ago)

For me the Tata Nano project would have turned out to be a boon for West Bengal, but that wasn't to be. Road-block comes in everyones way but, only the leaders are able to come out of those setbacks and make a successful way for themselves and for their organization. This is what shows the characteristics of Ratan Tata. I think it was a mega loss for the people of Bengal as they supported the wrong person who mislead them and if they would have allowed the Tata's to go ahead with the plan than the Economy of the state would have gone up like anything. Tata's would have provided lots & lots of employment. And today their lives have become miserable and they live in utter poverty. They aren't able to meet even two ends in a day. What carried them away was Mamta Banerjee's false claims to lift the standard of Singur with building of a rail coach factory. And the protests against the Tatas proved to be disastrous for them. They protested for those lands which were barren and would give nothing to them. Tatas gave them fair compensation, but this was destiny and today they are repenting on their destiny. Regards Arya Rudra Editor Multimedia News.