Talks set to keep Tata car factory in West Bengal

Tata Group's troubled project to build the world's smallest car in West Bengal was pulled back from the brink as a rescue deal was thrashed out this weekend.

Tata announced last Tuesday that, following blockades organised by politicians claiming to represent farmers who had lost land to the factory, it had removed all its staff from the half-built Nano car plant in Singur, about 30km from Calcutta, and was planning to relocate. But after talks on Friday night with Mamata Banerjee, the opposition politician leading the blockade, it looked as if a deal was close to being struck.

Partha Chatterjee, who leads Ms Banerjee's Trinamool Congress party in the West Bengal assembly, said Ms Banerjee would announce the outlines of a deal over the weekend. He commented "There was a positive intent to the talks. Discussions have been held regarding land and whatever Mamata Banerjee has to say, she will say."

Gopalkrishna Gandhi, Governor of West Bengal, who chaired the talks, said: "It was a constructive discussion in a good atmosphere. I am hopeful."

Trinamool, which means "grass roots", has been demanding that the Tatas and the West Bengal government hand back 400 of the 1,000 acres of land acquired from farmers for the factory. It claims to represent 2,251 of the site's 13,051 farmers, who refused a compensation deal in 2006.

After Tata's threat to leave, the party softened its stance, saying farmers could receive new land in exchange for that taken for the plant. It has offered to help Tata Motors buy less fertile land on the other side of the road, where its suppliers can set up their factories.

On Friday, Trinamool removed the blockade of the national highway that goes through Singur as part of the price for negotiations.

As well as the £190m Tata is thought to have invested in the plant, the action has threatened chairman Ratan Tata's dream of producing his new people's car at 100,000 rupees (about £1,300), and rolling it out in October.

Saugat Mukherjee, regional director for the Confederation of Indian Industry, said: "The people of West Bengal really need this project. This project is very critical, not only for the state but for the entire country."