Tata Motors’ Nano plant at Sanand in Gujarat is lying idle. Tata Motors has utilised just a fraction of the Rs 2000 crore facility and in whole of the last year, there have only been two months when Tata Motors utilised more than 25 percent of its installed capacity at Sanand. In fact for the first time this April, the company’s total production of the Nano fell below 1,000 units utilising just 4.5 percent of the installed capacity of 20,833 units per month or 2.5 lakh units per annum (CNBC-TV18 report). This is the state of the much touted Nano, despite months of advertising, heavy discounting and offering a first of its kind Credit Card facility to boost Nano sales.
So how did it all begin? Tata built a huge infrastructure for Nano in Singur, West Bengal, which faced tremendous resistance from the locals backed by Mamata Banerjee’s Trinamool. The farmers alleged that their fertile land was forcefully grabbed by the ruling left front. In November 2008, Gujarat CM Narendra Modi offered Tata Motors an eye-popping deal, a deal that convinced the auto giant to choose Gujarat over other states as the alternative for the Tata Nano’s plant. The incentive was Rs 9,570 crore soft loan over 20 years — close to 25 per cent of Gujarat’s annual budget. Tata Motors will repay the loan in 20 years, at 0.1 per cent interest rate and will repay the land price in eight equal annual installments. That’s not all. The state government also provided four-lane road connectivity and exempted Tatas from electricity duty, registration and transfer charges of land. The state also put up a waste disposal plant, supplied natural gas through a pipeline and provided 100 acres of land near Ahmedabad for a township. As if so much was not enough, Modi used some more public money to give Mr Tata free publicity for his Nano car when Modi put up hoardings with his and Mr Tata’s picture with Nano all over Gujarat.
This is the deal that the Gujarat government did not want to make public. Despite several RTI applications, the Government refused to divulge information on the pretext that it was classified information as it contained ‘trade secrets’ of Tata Motors. Unfortunately for them, details of this deal got leaked out in the form of a Cabinet note by Industries Department Deputy Secretary Shobhna Desai and now an embarrassed CMO of the Industries Department has initiated an internal inquiry to find out how the details of the deal went public. They also don’t want to tell the public that all the promises of employment to locals might as well be forgotten now that Nano is in a free fall.
However the real deal is still in the dark. Besides appreciating Modi’s investment friendly policies and telling the nation that he is PM material, one might wonder what else Mr Ratan Tata had to dish out to get this dream deal which might have costed the state in excess of Rs.30,000 crores for a mere 2000 crores!
By any standards Rs.30,000 crores of public money drained out for a private project whose total worth is less than one-tenth of the money spent has no parallel even in a very corrupt India.