KOLKATA The West Bengal government rejected on Tuesday a demand by agitating farmers to return disputed land acquired for building what is billed as the world's cheapest car.
Tata Motors, which is setting up the plant to roll out the 100,000-rupee ($2,380) Nano, has faced violent protests and political opposition over the acquisition of farmland in Singur, an hour's drive from state capital Kolkata.
Last week, Tata Motors Chairman Ratan Tata said he was prepared to move the plant from Singur despite having invested $350 million in the project.
"I just cannot give back the land," West Bengal Chief Minister Buddhadeb Bhattacharjee said at a business session in the state capital Kolkata.
"Giving back 400 acres is dropping the project, I cannot afford to do that," Bhattacharjee said, referring to demands made by farmers and opposition parties to return land.
The trouble began after the government took over 1,000 acres of farmland for the factory. The government offered compensation, but some farmers with smaller land holdings have refused compensation, demanding that land be given back to them.
The protests reflect a larger stand-off between industry in India and farmers unwilling to part with land in a country where two thirds of the billion-plus population depend on agriculture.
Mamata Banerjee, leader of the opposition Trinamool Congress which is spearheading the protests, has threatened to stage a statewide campaign.
"We will start a state-wide agitation now against the project unless the land is returned to the farmers," Banerjee told reporters in Singur.
At the weekend, thousands of farmers and opposition activists protested outside the plant, the latest in demonstrations that have often ended in clashes with police.
Bhattacharjee said he remained hopeful he could convince Trinamool Congress to end their agitation.
"I am trying my best. I still believe I can convince the opposition. I believe we should reach a consensus," he said.
"I hope the car will come out of the plant in October."
The Economic Times on Tuesday, citing unnamed sources, said Tata Motors could pull out of Singur in two weeks if the situation did not improve.
A Tata Motors spokesman declined comment on the report.
Ratan Tata had said last week there was no time frame for a pullout from Singur if they decided to move, and also said there was no "Plan B" for the Nano if they pulled out.
Tata Motors has since been flooded with offers from other states for the Nano plant.
Shares in Tata Motors, India's top vehicle maker, ended down 0.2 percent at 433.50 rupees in a Mumbai market that ended up 0.2 percent.
(Additional reporting by Rina Chandran in Mumbai and Tamajit Pain in Kolkata)