India's Nano car deadlock continues as talks fail

By Tamajit Pain

KOLKATA, India (Reuters) - Indian political activists opposing a car plant to build Tata Motors' super-cheap Nano car threatened fresh protests on Saturday after talks with the government failed to break a deadlock, officials said.

Tata Motors (TAMO.BO) suspended work at the factory in West Bengal state earlier this month and threatened to look at alternative sites after farmers backed by the local opposition party blocked roads leading to the plant and threatened workers.

The Nano project in the eastern Indian state has been mired in a land row since the snub-nosed, $2,300 car was unveiled in a blaze of publicity in January.

Farmers unwilling to give up their lands had demanded 300 acres of farmland from the factory complex.

The government says it can return over 70 acres (28 hectares) and compensate by paying more money to farmers, but they have refused the offer.

"The government compensation package is not what was promised to us," said Mamata Banerjee, leader of Trinamool Congress, which is spearheading the protests. "We will announce our next step after a rally near the factory on Sept 16."

Tata Motors said they were not willing to comment at the moment.

The stand-off threatens to undermine production capacity but is unlikely to delay the planned October launch of the Nano, billed as the world's cheapest car, as some units could come from existing Nano plants.

The Nano protests reflect a larger standoff between industry and farmers unwilling to give up land in a country where two-thirds of the population depend on farming.

Politicisation of farmers' resentment has further complicated the issue.

The Nano factory and its ancillary units were being built on about 1,000 acres of land. About 400 acres (160 hectares), earmarked for ancillary units, is under dispute.

Tata Motors says separating the ancillary units from the main plant would upset the project's cost calculations, and any alteration in the original arrangement is unacceptable.

(Editing by Bappa Majumdar and Mark Trevelyan)