Tata Motors to get Rs 766 crore compensation over Singur plant closure

The West Bengal Industrial Development Corporation Limited (WBIDC) has awarded Tata Motors Rs 765.78 crore in compensation, plus interest, nearly 15 years after its small car operations were halted in Singur following escalating violence against the company. Tata Motors will also receive Rs 1 crore to cover legal costs. 

1. Tata Motors had set up the Singur plant in 2007
2. Over Rs 1,800 crore was spent on this project
3. Tata Motors shut down Singur plant in 2008

The arbitration proceedings between Tata Motors Limited (TML) and WBIDC have now been settled with a unanimous award in favour of TML. The award, dated October 30, 2023, states that TML is entitled to recover a sum of Rs 765.78 crore from WBIDC, along with 11 percent interest per annum from September 1, 2016, until the amount is fully recovered. Tata Motors made this information public through a regulatory filing on Monday.

In January 2007, the Mumbai-based auto major had initiated the setting up of a facility in Singur, with an estimated cost of Rs 1,800 crore. The vendor park associated with the plant saw 13 vendors constructing plant buildings, while 17 others were in various stages of construction. Collectively, the vendors had invested around Rs 171 crore. The initial plan was to provide direct employment to over 2,000 individuals, with an additional 10,000 jobs being created indirectly among vendors and service providers in the plant's vicinity.

However, a political agitation by the All India Trinamool Congress over land acquisition issues derailed the project just as the plant was preparing to produce its first car in October 2008. The plant and its ancillary ecosystem faced significant challenges, including violence, disruption of activities, property damage, and threats to personnel.

Ratan Tata, the then chairman of Tata Motors, threatened to withdraw the company's plans from Singur. In response, several state governments, such as Punjab, Andhra Pradesh, Maharashtra, Orissa and Gujarat offered to provide an alternative location. With the situation in Singur not improving, Tata Motors ultimately decided to shut down its operations on October 3, 2008. The company moved to Gujarat, where the state government under then Chief Minister Narendra Modi provided additional incentives and tax benefits in support of the new plant.