November 2008

Automation, politics, and manufacturing clash in India

Tata Motors Ltd. is shifting production of the world's cheapest car to the western state of Gujarat. 

The company acquired 1,100 acres of land near Gujarat's business capital, Ahmedabad, in mid October and will relocate equipment from a failed West Bengal project to build the main production plant for its 623cc (38 cubic inches displacement) Nano minicar.

The automaker, India's largest, pulled out of its nearly completed facility in the eastern state after opposition from dispossessed farmers and political activists, who demanded nearly a third of the land, revert to the farmers.

West Bengal is an agriculture-dependent state and is the most densely populated state in India. West Bengal has the world's longest-running, democratically elected communist government.

The Tata Group and other big Indian conglomerates, such as Reliance Industries Ltd., as well as international giants such as Korean steelmaker Posco, often have faced difficulty acquiring land for their factories and special economic zones.

Thanks to its pro business state government, Gujarat has become a magnet for investment. Companies, including General Motors Corp, Royal Dutch/Shell Group, and Reliance, India's largest private company, have set up production there.

The Gujarat plant would create as many as 10,000 jobs and would eventually produce up to 500,000 cars a year.