Tata Motors opens new factory for Nano car

[June 02, 2010]  SANAND, India (AP) -- Tata Motors inaugurated a factory Wednesday to produce its super-cheap compact Nano car, nearly two years after violent farmer protests forced the company to relocate.

The new factory in India's business-friendly Gujarat state promises to unleash production of the pint-sized car, which Tata plans to export to Europe, and eventually the U.S.

Tata Motors chairman Ratan Tata and Gujarat chief minister Narendra Modi together drove the first car -- a sunshine yellow Nano -- off the assembly line shortly before 1p.m.

"We owe you a great debt of gratitude for having made this happen," Tata said to Modi.

An hour and a half later, a cyclone began blowing large chunks of roofing off at least one of the factory buildings. A ceiling also collapsed. The winds ripped off swathes of celebratory blue bunting and workers huddled in the rain under ruined flags near shattered flower pots.

Spokesman Debasis Ray said to his knowledge only one building was damaged and production would not be affected.

Protests against farm land being converted to industrial use, led by opposition leader Mamata Banerjee, forced Tata Motors to abandon its original factory in the communist-ruled state of West Bengal. Until now, Tata Motors has only been able to make small quantities at an existing factory.

Tata Motors said it would ramp up production in phases at Sanand to 250,000 cars a year, which will be easily expandable to 350,000 cars. Deliveries from the plant will begin this month. Next to the 725-acre plant, housed on former state grazing land, is a 375 acre park where 41 key component vendors are already setting up shop, officials said.

Since its March 2009 launch, just 30,763 Nanos -- which sell for just over $2000 in India -- have hit the streets.

The Nano was meant to herald a new era of car making, in which even the rising poor could afford to trade dangerous motorbikes for a safe car.

Nano's initial momentum faded after two brand-new Nanos caught fire, raising safety questions.

The company says the incidents were unrelated and revealed no safety design flaws. Tata Motors is adding additional protection to the fuel lines of all existing Nanos as a preventive measure, spokesman Debasis Ray said.

To celebrate the factory, a fleet of Nanos will be driven across 15,000 miles of India by a group of contest winners.

For the most part, locals have welcomed the Nano with open arms, though some complain they haven't gotten jobs.

"Everyone in Sanand would like to keep a photograph of Mamata Banerjee in our home to do puja," said Bahadurbhai Majithiya, editor of the Gujarat Aarsi newspaper, using the Hindi word for a prayer ceremony. "Such a high-profile project would never have come here were it not for her agitation. We are eternally grateful to her."

Gujarat has more land devoted to special economic zones than any other state but it is not immune to land protests, which have swept across India as it struggles to change from a nation of small farmers to a fast-growing industrial power.

Modi's government has treated the Nano project with care, scrupulously avoiding conflict.

The government only had to buy a small, 51-acre (20 hectare) privately held stretch from seven locals to build an access road to the factory and industrial park, which were built on land belonging to a government agricultural university.

A local land broker helped negotiate that deal in less than a day. All sold off only part of their land, and stood to benefit from rising land prices once the factory came.

Today, the road to the factory is flanked by fields and grazing buffalo.

The state has all but officially scuttled a plan to acquire land for an industrial zone around the Nano factory after locals protested handing over fertile farmland -- which yields two crops a year -- to industry, officials said.

Instead, the state is now looking into acquiring 177 square kilometers of less fertile land over nine villages about 10 kilometers from the Nano factory.

Sixty percent of Gujaratis make all or part of their living from the land, and the state is trying to get them a foothold in the rising industrial economy.

The Nano factory employs 2,400 directly, and Tata Motors expects that the factory will eventually lead to the creation of 10,000 direct and indirect jobs.

B.M. Pareekh, a state education official, said Tata Motors has hired 2,000 graduates of local technical training institutes, and agreed to take on 489 locals as apprentices.

[Associated Press; By ERIKA KINETZ]

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.