Tata Motors of India announced that the construction of a plant for the "nano," a low-price compact car scheduled to be released in October 2008, will be suspended.
The suspension was decided because the protest by farmers demanding the return of the plant site seized by the local government does not seem to calm down. Construction had been postponed for five consecutive days from Aug 28, but the company decided to suspend construction to ensure the safety of employees and construction workers.
The company is considering the possibility of relocating the construction site. The car's release expected for October is likely to be postponed.
The nano plant in Singur is located in the north of Calcutta in the West Bengal state. The farmers are demanding the return of 1.6km2 of land in the 4km2 of land that the state government seized. The protest activities are led by Mamata Banerjee, the leader of local political party All India Trinamool Congress.
Because of the protest activities, the number of engineers and workers engaged in the construction has been decreasing since Aug 24. Consultants from overseas and engineers on business trips are leaving the construction site to escape the threat posed by the protest activities.
As a result, construction was suspended when it was nearly finished and the test operations were nearly complete. Tata has started to discuss an alternative solution for relocating the plant and has been working on detailed plans for the relocation of the manufacturing equipment.
Tata has invested more than Rs15 billion (approximately ¥37.5 billion) and some 60 suppliers have acquired the surrounding land. The suppliers have also suspended their work following the decision by Tata.