Jitters from a dispute over the Tata Group’s plans to build the world’s cheapest car in West Bengal state are spreading to other Indian companies, with Infosys Technologies warning on Tuesday it might also be forced to rethink its plans for the state.
Infosys said the dispute, in which protesters have blockaded the site of the partially built factory for the Tata Nano car, was making it apprehensive about its own proposal to set up a Rs5bn ($127m) software development centre in the state. “Singur has created fear in the minds of India Inc and like all other companies we are watching the developments very closely,” said Infosys, India’s second-largest outsourcer. The dispute over Singur has worried corporate India because the Tata group is seen as the most acceptable face of capitalism in the country due to its extensive corporate social responsibility programmes.
There are concerns the controversy could not only undermine industry in West Bengal, the most important state in India’s under-developed eastern region, but also hurt foreign investor sentiment in the country.
The state’s main opposition party, the Trinamool Congress, besieged Tata’s partially built factory near Calcutta last month with mass protests amid claims the plant is being built on fertile agricultural land seized by the West Bengal government from farmers.
The Tata group, which wants to launch the Nano next month with a price tag starting at Rs100,000, has warned it will pull out if the issue is not resolved.
The opposition at the weekend suspended the protests after crisis talks with the government, with the two sides forming a committee to hammer out a resolution to the issue.
But there is still concern the dispute could reignite at any moment if the two sides cannot reach an agreement on additional compensation for those farmers the opposition says were evicted to make way for the plant.
Infosys said on Tuesday it had not pulled out of West Bengal and was not planning to. But it added: “We will rethink and re-examine our proposed investment if need be.” When it announced the West Bengal development centre in April, its chief executive S Gopalakrishnan said he was “impressed with the efforts of the state government in attracting such investments”.
In spite of positive signs from the negotiations over the dispute on Monday, the two sides appeared to be moving further apart on Tuesday.
The Trinamool Congress has told reporters it wants 300 acres from within the 1,000-acre Nano factory site to be given back to farmers, while the government has said they will be given land but mostly from other areas away from the plant.
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