Optimism over talks to save India's cheap-car plant

India - Talks to end violent protests over a factory in eastern India to manufacture the world's cheapest car entered a second day, with both sides expressing optimism.

The Marxist government of West Bengal state said it was hopeful of reaching a deal in the talks that began Friday with farmers and opposition parties.

"We are hopeful of a breakthrough," West Bengal industry minister Nirupam Sen said before entering the discussions.

The talks over the plan by India's giant Tata Group to make the ultra-cheap car in the impoverished state were chaired by West Bengal governor Gopalkrishna Gandhi, a grandson of Indian independence icon Mahatma Gandhi.

Sen's expression of optimism followed a statement late Friday by Partha Chatterjee, a leader of the Trinamool Congress party which has spearheaded the protests, that the two sides were "heading toward a solution."

The protesters claim farmers were forcibly evicted by the state government to make way for the Nano car plant and are demanding a return of land.

"The government is offering a package that will help all farmers whose land was acquired," Sen said.

The Marxist government energetically wooed Tata Motors, part of the tea-to-steel Tata Group, to set up the plant in the state. It is hoping the factory could lead the way for the state's industrial resurgence and create new jobs.

Tata Motors, India's largest vehicle maker which shot to international prominence when it bought British motoring icons Jaguar and Land Rover earlier this year, did not attend the talks.

Tata Group chairman Ratan Tata warned last month he would move the plant out of West Bengal if the demonstrations continued, even though Tata Motors has poured $350 million into the project.

The plant in Singur is 90 percent complete, and Tata Motors has said it aims to launch the Nano in October.

Protests have been going on for two years against the plant. But demonstrations worsened in the past few weeks, with protesters besieging the factory and threatening workers.

Tata Motors can produce the Nano at its other plants, but mass production could be set back by a year if it has to build a factory elsewhere, analysts said.

Scrapping the plant would also hit its finances, already under pressure from its $2.3-billion acquisition of Jaguar and Land Rover and slowing domestic vehicle sales.

The stand-off reflects a wider dispute between farmers and industry over land rights across the nation.

On one side are many farmers who say they will starve without their land, while business and government say India must industrialise swiftly to create jobs to employ the army of young people joining the work force.

The Nano, with its innovative light-weight engineering, was conceived by Ratan Tata to get poor Indians off motorcycles and into safer cars.

Business leaders have warned the hostile reception to the plant could hurt India's image as an emerging economic superpower and viable investment destination. - AFP