From the India Today archives (2008) | Tata leaves Singur: Leaving the future behind

(NOTE: This story was published in the India Today edition dated October 20, 2008)

Considering the unremitting zeal with which Buddhadeb Bhattacharya pursued the Nano, it appeared the small car was to him what the nuclear deal was to Prime Minister Manmohan Singh. He had invested enormous political capital to ensure that West Bengal was home to the world’s cheapest car.

For Bhattacharya, the Nano was not just about the 10,000-jobs, both direct and indirect, that would have been created in and around Singur, the small car was also the biggest test of the credibility of his determined campaign to brush aside what he called the state’s “wasted years”.

“The world is changing and we must adapt ourselves,” Chinese president Jiang Zemin had told the Communist Congress before demitting office. From the day he took office, he tried to do that by rolling out investor friendly policies that would free his state from the dogmatic rules of Marxism. A rollout of the Nano from Singur this Diwali would have been the most coveted badge of approval for him.

Bhattacharya’s dreams lie in tatters as Tata Motors last week announced the relocation of the mother plant of the Nano from Singur to Sanand in Gujarat. With the Nano gone, there is once again fear that West Bengal may slip into industrial isolation.

Bengal’s and Bhattacharya’s misery go beyond the Nano. “Brand Buddha” may have been the buzzword for young voters and investors, but when it came to championing the cause of Bengal’s industrialisation, Bhattacharya failed miserably.

The chief minister wanted growth and jobs, Trinamool Congress Chief Mamata Banerjee wanted an issue that would pull her out of political morass. The list of those caught in the crossfire and lost out is long-the Salim Group of Indonesia, Reliance Retail were the first.

Also facing uncertainty now is the German retail giant Metro Cash & Carry which started constructing a 1,00,000-sq-ft outlet in southeast of Kolkata a couple of years back. With Left Front partners opposed to renewing licence to the German firm, its investments could well go the Tata way.

The first casualty of this mismatch was the Salim Groups, which came in shortly after Buddhadeb assumed office. Its Rs 20,000-crore investment package included a Special Economic Zone (SEZ) at Nandigram, townships, housing, industrial parks and related Bhattacharya announced the scrapping of the chemical hub in Nandigram and owned responsibility for the lapses of his Government, including violence that claimed 14 lives.

Subsequently, Bhattacharya’s plans to invite large corporate houses in retail trade and investments has also hit a roadblock with showrooms of the food mart Reliance Fresh being attacked and vandalised across the state.

Though Reliance Fresh has returned after exiting Bengal last year, the business is still gripped by fears of resistance from Left groups. Even before the Tata pullout, the Singur effect was being felt.

A US India Business Council (USIBC) team that visited India recently had struck Bengal off their list of venues. Led by companies like Cargill and Boeing, this council could have brought in many US investors to the state.

The forecasts from India Inc, where sentiments range from despondency to pessimism, is grim with the broad consensus that it was a great setback to the economy of the state which looked set for a boom.

What is bothering industry is the future of other companies in Bengal at a time when a group like Tatas with their impeccable credentials could not survive the politics of the state.

Says Sunil Bharti Mittal, chairman and Group CEO, Bharti Enterprises: “If the House of Tatas, known for its values and care for the society, have to go through this, think of the others. The much needed fresh wave of industrialisation in the state could suffer.”

Dilip Chenoy, director general, Society of Indian Automobile Manufacturers, an apex body of the auto sector, says, “Instead, what has happened will have serious ramification for other projects and for the state of West Bengal as well.”

The search for an answer for the future has acquired extreme urgency given the overall deep freeze that has set in as far as industrial investment in the state goes. There are major schemes like IT parks, SEZS, steel plants and more in the pipeline, whose fate looks uncertain.

Amit Mitra, economist and FICCI general secretary, warns that the losses could be colossal if they are hit by issues similar to Nano.

“What Bengal could lose is Rs 1,93,000 crore of investment spread over 64 projects, which are in the pipeline, including Jindal’s steel plant. Moreover, there are 38 SEZs with investments of Rs 40,000 crore. How will these be implemented if industry starts walking out?” wonders Mitra.

In the danger zone could be a slew of investment announcements worth Rs 87,037 crore made during the last year, with the big ticket ones being Shyam Group’s capex worth Rs 9,900 crore to set up an integrated steel plant, Bushan Steel’s Rs 8,800-crore plan and Vedanta Group’s Rs 20,000 crore for setting up aluminium manufacturing capacities in Burdwan district.

In the oil sector are capex plan worth Rs 20,000 crore with Cals Refineries’ 20 million tonne per annum capacity refinery project in Haldia and Nayachar district for the next five years and Larsen & Tourbo has a plan to set up new ship building projects worth Rs 2,500 crore for the next two years.

The state Industry Minister Nirupam Sen was among the saddest men in Kolkata last weekend. “For their political gains, the main Opposition party has played a destructive role. I don’t know how much they have gained, but it certainly is a big loss for the people of West Bengal,” he said.

And though thousands of crores of investment has been pledged, what now matters is how they are seen in the light of the Tata pullout. “If they feel that the land allotted to them may be contested, there could be rethinking,” says Mitra.

But there is a significant section for whom industrial prospects in Bengal continue to hold promises. The Nano pullout notwithstanding, there are many things working for this fertile state, according to Sajjan Jindal, Associated Chambers of Commerce and Industry of India (ASSOCHAM) president and steel tycoon, who has a Rs 35,000-crore steel plant planned for Bengal.

The manufacturing sector, which constitutes around 54 per cent of the industrial product, has been growing at nine per cent.

“The state stands at seventh position among all states in terms of disbursement of scheduled commercial credit which in 2006-07 was Rs 77,391 crore and has grown at the rate of 21 per cent and 23 per cent in fiscal ‘07 and fiscal ‘06,” says Jindal.

All is not lost though. A day after the Tata pullout, the ASSOCHAM lent its support to the chief minister. “This is just unfortunate. But it doesn’t mean that the Government of West Bengal has lost the confidence of India Inc or overseas investors,” its secretary D.S. Rawat wrote in a letter to Bhattacharya.

How much will all this alter the state’s political equations? The earlier hints are likely by November end, when the Howrah Municipal Corporation elections are due. After the Nandigram fiasco, the CPI(M) had seen major setbacks in Singur and Nandigram during the panchayat elections in May.

A more accurate picture will emerge next year when the Lok Sabha elections take place. Banerjee claims her shrill protests were aimed at protecting the rights of the farmers. She will soon get to know if the ones she had been fighting for still keep their faith in her.

Subscribe to India Today Magazine