Singur verdict and a car script that went awry

Mamata Banerjee will have reasons to feel jubilant. The Chief Minister of West Bengal was at the forefront of the Singur agitation a decade earlier when the CPI(M) was in power.

The bone of contention was 400 acres of fertile land that had been forcefully acquired from farmers for Tata Motors’ small car project. On Wednesday, the Supreme Court decreed that these would have to be returned which only vindicated Banerjee’s stand on the issue.

The judgment comes nearly eight years after Tata Motors had decided to relocate the project to Gujarat. It remains to be seen if the land that will be returned to farmers is still cultivable. Despite this, there are no two ways about the fact that it is an important verdict which acknowledges the livelihood rights of farmers and puts the spotlight on land acquisition.

The bigger question, however, is if this will impact investments in West Bengal. There is a school of thought that believes industry will now be even more wary following the Singur verdict even while the State government does not subscribe to this pessimistic outlook. It was only a couple of years back when Hindustan Motors also downed the shutters on its decades-old plant at Uttarpara. The Ambassador was in any case on its last legs but the facility was symbolical of an iconic brand which had a close association with Kolkata’s yellow cab fleet.

This perhaps puts in context why the Tata project was critical to West Bengal in terms of creating jobs in a vibrant auto ecosystem. Yet, the process of land acquisition sealed its fate once the agitations began and it was only a matter of time before its inevitable closure followed.

From West Bengal’s point of view, this was a prestigious project which had already hit headlines across the world since the time Ratan Tata made known its price tag. The ₹1-lakh car got the attention of top names in the business like Carlos Ghosn, the CEO of Renault and Nissan, who famously declared that frugal engineering was imperative for carmakers in emerging markets.

By the time Ratan Tata unveiled the people’s car at the 2008 Delhi Auto Expo, there was near hysteria and the crowds went berserk when he reaffirmed the price tag with the now memorable line: ‘A promise is a promise’. The Nano was among the biggest attractions at the event even while trouble was brewing at the plant thousands of kilometres away.

It was now becoming increasingly evident that commissioning the Nano facility was not going to be a cakewalk as the protests on land acquisition intensified. Ancillary suppliers were worried too since they had committed investments here but were uncertain of the road ahead. Eventually, Ratan Tata announced in October 2008 that the company was exiting Singur and would now set up the project at Sanand in Gujarat. Valuable time was lost in the process even as interim production arrangements were being made for the Nano at the Pantnagar facility in Uttarakhand. Clearly, the production schedules could not cope with the order book and the fervour associated with the people’s car was now gradually on the wane. In addition, the ‘cheap’ price tag eventually became a millstone around the Nano’s neck and it just could not recover thereafter.

The entire exercise of setting up a plant in Singur just turned out to be futile . Farmers who had their lands forcibly taken away lost precious years of their livelihood. They will now have to contend with the task of readying it all over again for cultivation once they get it back. Others who perhaps parted with land willingly saw their dreams evaporate when the Nano project moved out of Singur.

From Tata Motors’s point of view, the project turned out to be a nightmare especially when it meant closing down a near complete plant and starting all over again elsewhere. The Nano has just not been able to take off despite a host of initiatives efforts by the company to steer clear of the ‘cheap car’ association .

Land acquisition has always been a tricky subject in India especially when it means diverting it from farm use to industrial development. States are keen on getting big ticket investments in the manufacturing sector as these generate a lot of jobs. Maharashtra, Haryana, Tamil Nadu, Karnataka, Uttarakhand, Gujarat, Andhra Pradesh and Madhya Pradesh have been pulling out all stops to make this a reality and the results are there for all to see.

In the auto space alone, these States are home to big brands such as Suzuki, Ford, Volkswagen, Mercedes, BMW, Renault-Nissan, Honda, Toyota, Tata Motors, Mahindra & Mahindra, Bajaj Auto, TVS Motor and Volvo Eicher. Yet, the issue of adequate compensation to farmers has always been a contentious one and there have been any number of cases where land was given away for a song to companies.

However, when a transparent system is in place to assure fair compensation, it becomes a win-win situation as some governments have shown in the recent past. West Bengal, likewise, should go the extra mile to assure investors that it is a perfectly fine destination for business. This will be its biggest challenge in the aftermath of the Singur verdict.

COMMENT NOW