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Gujarat bags Nano car project

autos Updated: Oct 08, 2008 00:22 IST
Rathin Das
Rathin Das
Hindustan Times
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Even before the Tatas had announced their decision on pulling out from Singur — or not — Gujarat Chief Minister Narendra Modi had asked officials in the state’s Industry and Revenue departments to find 1,000 acres that could be made immediately available for the Nano plant. The effort paid off.

On Tuesday, Ratan Tata said a site near a sleepy town in Gujarat would build the world’s cheapest car, with a price tag of Rs 1 lakh.

The decision reinforces the investor-friendly image of Gujarat and its chief minister. It would also help the Tata Group to expand its presence in one of the country’s fastest growing and most prosperous states.

At least four other states held talks with Tata Motors to relocate the Nano plant from Singur in West Bengal to their territories. Gujarat scored because it moved “so quickly, so efficiently and with so much enthusiasm,” Tata said. “It’s the speed with which everything was provided, particularly land.”

The decision was also guided by the state’s well-developed infrastructure network, particularly its highway system and reliable power supply, and all such “intangibles” that come with a business friendly environment, Tata said.

“Welcome Nano,” read a poster behind the podium where officials from the state government and Tata Motors signed the deal.

“I see it as the beginning of a partnership between the Tatas and Gujarat that would give a new direction and drive to our state's development,” said Modi.

The Nano project is a big win for Modi, who often tries to deflect criticism of his politics by trumpeting his achievements on the economic front.

“Modi has also played a huge role in attracting investors and creating the conducive environment in the state,” said Yezdi Nagaporewalla, an executive director at consulting firm KPMG.

The last such success Modi was the “Vibrant Gujarat” campaign, which prompted foreign companies to pledge $102 billion investment in the state and had people like Tata say: “You are stupid, if you are not in Gujarat.”

Tata Motors will get 1,100 acres of land near the town of Sanand, off a highway that connects it to key ports in the state as well as Mumbai and is just 35 kilometres from Ahmedabad.

The land, which was earlier used by a state-run agriculture university, is owned by the government and, therefore, leaves little scope for any dispute.

Maharashtra lost out because the company insisted on government land near a city and it wasn’t possible for the state to find 1,000 acres of such land, Chief Minister Vilasrao Deshmukh told HT.

Andhra Pradesh spoiled its case as it couldn’t prevent farmers from staging an anti-Nano demonstration when Tata officials visited the state to negotiate. In Uttaranchal, the state couldn’t manage to get more land near Tata’s existing plant in Pantnagar. It wasn’t immediately clear what went against Karnataka.

That said, it takes at least 18-24 months to set a mother plant for car like Nano. Chances are Tata Motors would try to expedite. The company will invest Rs 2,000 crore that will manufacture 250,000 to 300,000 cars in the first phase.

Meanwhile, a limited number of Nanos will be rolled from its existing plants in Pune and Pant Nagar to keep date with customers, he said.

“We may not have the volumes, but it will be our endeavour to stay closer to the timeline,” Tata said. The company had planned to launch the car in the October-December quarter.

The Nano project gives a big boost to Gujarat’s hope to become a leading state for automobile manufacturing.

“So far Gujarat was recognised for petrochemical and pharmaceuticals, with Nano we will foray into automotive sector, and in a big way,” Modi said.

(With inputs from Kamayani Singh in New Delhi, Dharmendra Jore in Mumbai, Ashok Das in Hyderabad and Utpal Parashar in Dehradun)