Tata Motors will take a final decision on the location of the Nano project by September 15 and will officially convey this to all its ancillary suppliers at a high-level meeting in Mumbai a day laterIndications are that the company has “more or less decided” that the car will now roll out of its Pantnagar facility in Uttarakhand, which manufactures the Ace pickup. This facility is already spread across 1,000 acres, which is abundant, and sources say that an additional 300 acres will be quite adequate should the Nano be assembled here.
According to top sources, Tata Motors is literally at the end of its tether in Singur. The latest development on seeking a restraint from the Calcutta High Court on making public details of the land sale has reportedly been the last straw. In fact, it looks as if chairman, Ratan Tata has made up his mind to “close the chapter” even while frantic requests are being made by state government officials to reconsider the decision.
Why did Tatas choose Singur?
Ironically, it was the package of incentives in Uttarakhand which literally got the West Bengal government to lay out the red carpet for Tata Motors. As per details on the website of the West Bengal Industrial Development Corporation (WBIDC), the package of incentives was required to help the state “fulfil its commitment to match in equivalent financial terms the fiscal incentive foregone by Tata Motors in Uttarakhand”.
For a start, WBIDC would provide a loan to the company at 0.1% interest per annum for amounts equal to gross VAT and CST received by the state government “in each of the previous years ended 31st March on sale of the car from the date of commencement of sales”.
This would continue till the balance amount of the “Uttarakhand benefit” was reached on net present value basis. The loan with interest would be repayable in annual instalments starting from the 31st year of commencement of sale from the plant. The loan availed in the first year would be repaid in the 31st and the loan availed in the 2nd year repaid in the 32nd year and so on.
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According to the website, WBIDC would ensure that the loan is paid within 60 days of the close of the previous year (on March 31) failing which it would compensate Tata Motors for the “financial inconvenience” caused at 1.5 times the bank rate on the amount due.
The 650-acre land has been leased to Tata Motors on a 90-year lease at a rental of Rs 1 crore per year for the first five years with an increase of 25% after every five years till 30 years.
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After this, the rental would have been up to Rs 5 crore a year with an increase of 30% after every 10 years till the 60th year. From the 61st year, it would have been Rs 20 crore a year right up to the 90th year.
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The government would have also provided Tata Motors a loan of Rs 200 crore at 1% interest annually repayable in five equal annual instalments starting from the 21st year from the date of its disbursement. Electricity for the project was calculated at Rs 3 per KWH.