Tata Motors moves Indian Nano plant

Mumbai-based Tata Motors (NYSE:TTM) has moved the production facility for its Nano car across the country from the eastern state of West Bengal to Sanand in the western state of Gujarat.

Tata CEO Ratan Tata and Gujurat Chief Minister Narendra Modi signed an agreement earlier today confirming the new factory for the $2,500 USD car (see India’s Tata Motors reveals electric car prototype).

Shares for Tata Motors were down 5.7 percent at close of trading today.

The decision to move came after threats and protests halted work at the Singur facility for more than a month. Construction was 90 percent complete when it was halted August 28 by violent protests demanding the return of 400 acres of land that farmers said they were forced to cede for the factory. 

Tata has spent nearly Rs. 1,500 crores ($338 million) to build the Singur factory, and about 60 suppliers collectively spent about Rs. 500 crores ($112.7 million).

The new Sanand facility will sit on 1,100 acres provided by the government and will include both the production plant and the vendor park. Because the new site is government-owned, Tata expects "the shortest possible time lag and least possible incremental project cost,” the company said in a release.

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After a closed-door meeting Friday, the company's CEO Ratan Tata and West Bengal Chief Minister Buddhadeb Bhattacharjee announced that the Tata production plant would be leaving the state.

A news release from Tata Motors said that company representatives "expressed their extreme anguish at the heightened level of agitation and hostility by the opposition parties" to the West Bengal government.

"Threats, intimidation and instances of assault and general obstruction in one form or the other have been the order of the day," the release said.

Over the weekend, West Bengal residents rallied against the protesters and asked Tata Motors to reconsider their decision to move away. Residents worried that losing the plant would deal a serious blow to the state’s economy. The plant and suppliers were expected to create 10,000 jobs.

The Nano was introduced in January, when Tata Motors announced it would sell the vehicle in India for one lakh ($2,500 USD) (see Hyundai introduces competitor to India's Nano minicar).

Tata Motors did not say how long it would take to get the Gujarat facility ready for production. While announcing the production plant’s move, Tata added the company hopes to continue production on the world’s cheapest car at two of its other facilities in Pune and Pantnagar and launch the Nano before the end of the financial year March 31.