Monday, June 9, 2008

‘We are happy with the way things are in Singur’

Having travelled on the ground, Shoma Chaudhury asked Ravi Kant, MD, Tata Motors, some hard questions on the company’s role in Singur. He fielded them all

AP Photo

We follow a Tata Code of Conduct. This translates into being fair and civic minded in all our projects
1) How do you read the situation in Singur? Has the government made mistakes? Have you made mistakes? Would you do some things differently if you had the chance now?

Ans: It is rather unfortunate that the entire project has been dragged into a political controversy. West Bengal was one of the states, which were keen to locate the plant. As you would be aware there has been de-industrialisation in the state for the last several decades, and the present government is keen for rapid re-industrialisation. The state government showed keenness to host the plant, rightly concluding that it will have a ripple effect of attracting greater investment for rapid industrialisation. Incidentally, we had the option of setting up the plant in some other states as well, where major encouragements are being offered by the Central Government.

We believe due process of law has been followed in acquiring the land. This has been confirmed by the High Court of Calcutta in its judgment of February 14. We also learn that the state government has announced compensation, and a huge majority of the affected people have already taken the compensation. Importantly, at Singur, dwelling units of the affected people are outside the acquired land and therefore they are not being displaced. The government had shown us several plots, including some in and around Kolkata, from which we chose the one which is most amenable to setting up the project based on several considerations. You would be aware that we have chalked out and have begun to implement a plan to integrate the community with the project. The plan includes providing training to enhance employability of people, supporting women in forming self-help groups to provide items and services relevant for the plants, and general community development. Panchayat leaders from Singur have visited our Jamshedpur plant have seen for themselves what can be achieved. Since the beginning of construction of the plant on January 21, hundreds from the local community are working on the site every day. We are confident that as the project progresses, people will begin to see even greater benefit. We are satisfied with our decision to locate the project in Singur – it will help in the revitalisation of the automotive industry in West Bengal.

Tata Motors has not used state force, or caused it to be used. We believe the local community is with us
2) Is there a Tata code of conduct in business? Are there any general practices, situations, unfair advantages other companies may be comfortable with, but you would like to remain disassociated from?

Ans: True to the tradition of the Tata Group, Tata Motors strictly adheres to the corporate governance principles practised by the Tata Group.

It translates into being fair and civic-minded, fulfilling its duties to the entire spectrum of stakeholders, and, most importantly, making integrity an article of faith across all its operations. These norms have been articulated in the 'Tata Code of Conduct', which guides the actions and decisions of the group's companies and employees. The ethics code in the Tata Group covers much more than financial dealings – it sets out the terms of transaction with customers, suppliers, vendors, shareholders, and above all the community. It has been the tradition of the Tata Group to ensure that its manufacturing centres and operations are beneficial to communities, among which they exist. A project plan, from the very beginning, is so conceived that it forges a bond with the community. This has been our principle for Singur too.

This can be amply demonstrated by visiting any of our plants, like Jamshedpur, Pune, or Lucknow.

3) There are many questions being raised about your project in Singur. Some seem very valid. Could you comment on them?

1) Given that the Tata Motors small car project is a private, profit making enterprise, why has the government been used as an intermediary?

Ans: We wish to point out that the land does not belong to the Tatas. The Government of West Bengal has acquired the land for the West Bengal Industrial Development Corporation (WBIDC), which will lease it. The state government decided to follow this process, which we had no objection to. Every state we were talking to had committed to give us land either acquired or to be acquired by them. We do not see the acquisition by the West Bengal government as an exception or something special done for us.

2) Apparently the government is spending close to Rs 140 crore of public funds to acquire that land for your project. However, Tata will pay only Rs 20 crore back after 5 years of receiving the land, and at minimal interest. How is this justified? Is the government a shareholder in the project?

Ans: The commercial terms are not in the public domain, and therefore I will not comment on whether your facts are correct or incorrect. The land is being leased to us. It is part of the benefit, the state government is providing to match incentives being offered by other competing states. As I have said earlier, it is not an exception but in line with what other states are willing to do in view of the long-term benefits being accrued to the state.

3) Tata Motors was apparently shown 4 other sites for the factory. What were they? On what grounds were they rejected?

Ans: The Government showed us several plots. Our expert team, considering the unique requirements of the plant site, including physical characteristics, logistics, cost etc, selected the plot in Singur.

4) People have been demanding that the MOU between you and the government be made public. Why is this not being done?

Ans: The Government of West Bengal has stated its position on this issue.

5) Land is being acquired for your factory under the clause that it is for “public purpose”? What is the “public purpose” of a car factory, set up with the aim of earning private profit?

Ans: It is for the government to explain. This is not the first time a government – state or central – has acquired land for industrialisation and has given it to private or public parties.

In Singur, besides Tata Motors plant, several ancillaries are coming up on the land that is being leased. Tata Motors itself is investing about Rs.1500 crores, and the ancillaries will make additional investment.

The project, in its totality, in Singur will restore to West Bengal, once one of the three centres of auto manufacturing, a place in the industry’s expanding map, gaining for the state a share of direct and indirect benefits in employment creation and overall economic development supplementing the advances in agriculture. The project includes some of the best-known names from the auto component industry, who will set up facilities, in the adjacent vendor park. It is not inconceivable how this first initiative can induce a whole host of other organisations, cutting across industries, to recognise the attractiveness of the state. This actually has been noticed in recent times in Uttaranchal, where the entry of one company has induced several others to follow suit.

These investments lead to ancillarisation, support industries and services, thereby leading to a multiplier effect, through small scale units, a variety of services on overall economic development, much beyond the project area.

In the next 10 years, the automobile industry will generate an additional 25 million jobs across the country. The investments we are talking about will help the state get a share of this job creation.

6) Comparable car factories take up only 300 acres or less. Why are you acquiring 997 acres? What use is that land gong to be put to? Why is all of it being subsidized by the government?

Ans: Out of the about 997 acres of land that is being acquired by the West Bengal government, the Tata Motors small car factory will be set up on around 650 acres. The remaining about 300 acres would be used for setting up the vendor park, where ancillaries will set up their plants. These are the auto component manufacturers who would be supplying the critical parts for the small car. They are free to supply to other organisations as well.

7) The other clause in the Land Acquisition Act being used in your favour is the “socio-economic development” of the region. Singur is already a rich, self-sufficient, agrarian economy. Your project will evict thousands of farmers and landless labours. The compensation will turn their rich, perennial capital of land to pretty meager temporary monetary wealth. Turn a rooted agrarian economy to floating migrant urban population. How can this be deemed socio economic development?

Ans: The acquired plot excludes homesteads. So no resident of Singur is getting displaced. Secondly, farming there mostly employed seasonal labour. In contrast, the project will generate in the initial few years, over 10,000 jobs which are not seasonal.*

8) If you claim governmental subsidies on the grounds of “public purpose and socio-economic development”, are you not morally bound to set up factories in backward regions? Why take up prime land close to a metropolis and existing infrastructure? Why do you need to be subsidized to do his?

Ans: Tata Motors and Tata Group have historically invested in setting up facilities when none existed. Jamshedpur, Pune, Babrala, Mithapur and recently Uttranchal are examples of manufacturing facilities set up by Group companies which have had a very positive impact on the local economy and the well-being of people living in the area.

9) How many jobs do you envisage your factory will create? What kind of people will it employ? What is the break-up of this? How many local people will it be able to absorb?

Ans: The Tata Motors’ plant operation is expected to create employment in excess of 10,000 direct and indirect jobs within the plant, amongst vendors and service providers in the vicinity. Essential to generating employment for the Singur community is enhancing employability.*

Tata Motors is initiating various steps to train people of the Singur villages, who had earlier registered with the WBIDC, to improve their employability. It has already selected a batch of individuals, on the basis of a test and interview, for extensive 6-month training. Another group of residents of Singur, selected by the WBIDC, is at present being trained by the Ramakrishna Shilpa Mandir (Belur). The company is in the process of organising more extensive training for them based on a selection process. Arrangements will also be made to impart relevant training to other individuals, in the WBIDC list, appropriate to their educational background and skills and based on a selection process.

As part of the project, Tata Motors will also organise groups of women from Singur families and enable them to produce various items, which will be required during the construction phase and when the Tata Motors and vendor plants are operational. Last week, the first self-help group of women from Singur villages started a canteen to supply food for the Tata Motors Small Car project site. This is part of the company’s plan to increase income-generation for the families. Other such group activities could include tailoring to manufacture personal gear, cable harnessing, electronic items etc.

The Tata Group has also decided to support community development in the area. Plans are to establish a community centre, offer support in primary health, education.

10) Your factory will only be able to create 1000 jobs, if that. Not all of these jobs will be awarded to local people. The project will displace at least 11,000 families, i.e., an average of 44,000 people, conservatively speaking. The government has no rehabilitation plan for them. Are you comfortable with this?

Ans: There is no displacement of families or houses in the acquisition of the land. The project will generate over 10,000 direct and indirect jobs. Our focus is on enhancing employability as well as creating opportunities for self-employment.

11) There has been violence and police action, and section 144 in Singur. Are you comfortable associating with this? Why have you not taken the initiative to speak to villagers and build consensus rather than use State force to wall off the land.

Ans: Tata Motors has not used state force, or caused it to be used. In fact, for some time now, Tata Motors has been directly engaging with the Singur community, and we find overwhelming support for the project. The participation of people from the villages in the construction of the plant, the participation of women in starting the self-help group for food supply indicates that.

12) There are 56,000 factories in Bengal lying defunct. People want to know why new industries cannot be started in those places. What is your response to that?

Ans: I think it would be best for the West Bengal Government to answer it.

13) People in Singur say they would have welcomed agro-industries in the region, something related to the local economy rather than a car factory that displaces their economy to set up something else. Would you concede some fairness in this?

Ans: As I have stated and what we see on the ground is that people of Singur have welcomed our project – they are actively participating in it.

14) There have been reports that Tata feels the opposition in Singur has been engineered by rival companies and political parties. Even if that were really the case, the questions posed here still remain valid to a neutral party like me. Would you concede that?

Ans: We would not like to say anything beyond what our Chairman, Mr. Ratan Tata, has already stated on the aspect.

15) While continuing with economic reforms, would you agree the time has come to rethink some of the directions the new economy is moving in?

Ans: There has to be continuous thinking on how we can learn and improve. It is important to look at issues and developments on a continuous basis.

16) The resistance to SEZs and industrial plants and projects across the country is being projected as a factory vs. farm, industry vs agriculture divide. How do you see it? Would you agree people’s resistance is against the arbitrary processes involved rather than to industry itself? Amongst reformers and capitalists, there is often very easy talk about “collateral damage”, the “pain” of growth. What is your view on this?

Ans: Any kind of change will evoke concerns. It is important to engage with the community and give them the confidence that the change will impact their lives positively.

17) Tatas’ projects have run into violent resistance at Kalinganagar and Chattisgarh. What are your learnings from all this?

Ans: The violence in the protest has always been beyond our understanding. However, what is important is the change management that has helped people to appreciate the genuine efforts put by the Group in enhancing the quality of life of the local community.

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Mar 03 , 2007