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Tata Motors Fights Indian Government on Land Grab

Rows of Tata's ultra-cheap Nano cars sit at a Tata Motors manufacturing plant in Sanand, Gujarat state, India, June 1, 2010 (file photo).
Rows of Tata's ultra-cheap Nano cars sit at a Tata Motors manufacturing plant in Sanand, Gujarat state, India, June 1, 2010 (file photo).

At the High Court in Kolkata, India, lawyers for Tata Motors contested a new law that allows the government to cancel its lease for a large plot of land that was to be used to produce the world's cheapest car.

The land in Singur was acquired from farmers by West Bengal's former communist government in 2006. It was part of a push to industrialize the state.

But farmers bitterly opposed the project, many refused to accept compensation for their land, saying it was too little. As their protests turned violent Tata moved the project to another state, although the factory had already been built.

On the forefront of the protests was a fiery political leader, Mamata Banerjee. Last month, she became the state's chief minister after defeating the communists in state elections. Her campaign pledges included a promise to return the Singur land to farmers.

Earlier this month, Banerjee's government passed a law allowing it to reclaim 400 acres of land, given to Tata, for which farmers had never accepted compensation. Tata Motors challenged the law, but has not elaborated.

Economist D.H. Pai Panandiker heads the independent research group RPG Goenka Foundation. He says it is important to the industry that commitments are kept.

"If one government enters into a contract, gives it to a business enterprise and now a new government comes and disturbs that contract altogether... in a democracy one government cannot undo what a previous government had done. Contracts are sanctimonious," noted Panandiker.

In India, Singur has become a symbol of rising conflicts over land as farmers resist giving up their land for industrial, mining and infrastructure projects.

In the eastern Orissa state, thousands of villagers have been protesting the state government's efforts to acquire land for India's largest foreign investment project - a $12 billion steel plant to be built by South Korea's Posco. This month, women and children were among those who formed a human ring to prevent government officials from taking over the land. The protests have prompted the government to put its acquisition drive on hold.

Economists say foreign investors are being deterred by such protests.

Meanwhile, the Indian government is under growing pressure to balance the interests of industry and farmers through new legislation that tries to ensure farmers get fair compensation for their land and guarantees of an alternate livelihood.