TATA THREAT INTENSIFIES SINGUR TALKS

UNCLAS KOLKATA 000253

SENSITIVE
SIPDIS

DEPT PASS TO USTR

E.O. 12958: N/A
TAGS: ECON EINV EIND ELTN IN
SUBJECT: TATA THREAT INTENSIFIES SINGUR TALKS

REF: A. 08 KOLKATA 231

B. 07 KOLKATA 380

C. O6 CALCUTTA 453


1. (U) SUMMARY: On September 3, Tata Motors announced that it
has begun analyzing options to pull its Nano car project out of
West Bengal. The opposition Trinamul Congress (TMC) appears to
have been shaken by the threat, which came after several days of
negative publicity and a growing public perception that closure
of the Tata plant would harm not just the Communist Party of
India (Marxist) (CPM),which runs the Government of West Bengal
(GOWB),but also the common man and the Singur community. West
Bengal Governor Gopalkrishna Gandhi is mediating talks between
the GOWB and TMC, with talks starting on September 5. There is
speculation in the business community that Tata's announcement
was issued in order to put pressure on TMC to agree to a
compromise. END SUMMARY.


2. (SBU) On September 3, Ratan Tata announced suspension of the
construction and commissioning work at Tata's Nano plant in
Singur. On August 24, TMC started an indefinite siege of the
plant, demanding the return of 400 acres of land the GOWB
acquired from farmers to provide to Tata for the plant (see
reftels). Tata explained that protesters, in their second week
of a siege of the plant, had intimidated workers and he was
suspending operations because he could not ensure the safety of
its workers. Tata added that the company is evaluating options
for manufacturing the Nano at other company facilities and is
preparing a detailed plan to relocate the plant and machinery to
an alternate site. A senior Tata Steel employee, who claims
personal knowledge of Tata's plans, told ConGen that Tata is
already producing the Nano at an alternative site and would not
miss its October launch deadline even if the Singur plant does
not reopen.


3. (U) Tata's announcement came at the end of several days of
negative media coverage of the TMC's siege. While no violence
has been reported since TMC's blockade started on August 24, the
media has reported that workers were harassed and intimidated by
members of the blockade. The media widely reported the story of
a 65-year-old farmer from Singur, who committed suicide after
hearing Tata might pull-out from Singur. A rare alliance of
small business owners, suppliers of raw materials and
information technology workers also formed to confront TMC
loyalists, using Internet blogs and media stunts to draw
attention.


4. (SBU) TMC's weakened position appears to have raised hopes
for a settlement. West Bengal Governor Gopalkrishna Gandhi
agreed to mediate talks between CPM (GOWB) and TMC, with talks
starting on September 5. Former Member of Parliament and TMC
ally Jayanta Bhattacharya (protect) told EconFSN on September 4
that Mamata Banerjee has softened her position and is ready to
find a solution. However, West Bengal Industrial Development
Corporation Advisor Sudip Sinha (protect) told EconFSN that some
of Mamata's ultra-Left allies within the Krishijami Jiban
Jeebika Raksha Committee (farmland, life and livelihood
protection committee) are looking to block a negotiated
settlement. Sinha believes that these ultra-Left groups are
ideologically opposed to industrialization at the cost of
agriculture and are immune to public opinion as most of them
have no ambition to hold public office.


5. (SBU) COMMENT: The Singur political theatre continues, with
each party - CPM, TMC and Tata - jockeying for an advantage. The
CPM and TMC do not appear to have a strategy for resolving the
conflict, but are responding tactically to each other's moves.
Both CPM and TMC are trying to preserve a public image that they
support development in West Bengal, but both are constrained by
internal conflicts and political realities. It is unclear
whether Ratan Tata has a long-term strategy, but by suspending
operations at the Singur plant right before the talks, he has
inserted himself into the political fray. END COMMENT.

PAYNE