Freitag, Oktober 03, 2008

Ta ta Tata

Sorry for the pun, it's a serious subject.


I suppose it's a quintessential Indian problem, but the saga of the Tata Nano is instructive of the sort of socio-economic factors that help shape investment decisions.

The Tata Nano has been described elsewhere: suffice to say that it is a product aimed at providing personal mobility at extremely low cost. Potentially enormous benefits for the average Indian consumer.

The story starts a few years ago. The communist-led government of West Bengal invited Tata to set up plant in Singur and acquired 1000 acres for the company's usage. Once the farmers found out what the land was going to be put to use for, they wanted more for their land, but the government didn't give them more. Bad blood developed, the opposition party in  the region got involved in stoking up the anger, and the situation recently escalated: the farmers have blocked access to the buildings and protests have turned violent.

As a result, the needed managers refuse to move there: recent events have made middle-class managers a tad resistant to the idea of having to deal with worker disputes. This was not helped as the labor minister said that the death should serve as a warning to managers.

The workers had been dismissed when they demanded higher wages.

It's not clear, though, who the attackers were who killed Lalit Kishore Choudhary. They were not employees of Graziano Tranmissioni, the Italian auto parts company whose layoff of over 100 workers led to his death. A total of 63 people were arrested after the manager was beaten to death.

Tata has said it is not comfortable having to work under police protection where they are apparently not wanted. The planned plant would have produced 30 000 Tata Nanos per month, back-up capacity will be used to make 10 000 of them in existing plant and facilities instead.

But what is going on here? The CPI(M), which runs the region, has some explaining to do: the leader of the party in the region has been arrested for the rape and murder of a young woman who was involved in opposing the plant: he refuses to take a lie detector test. The young woman was the leader of the movement launched by the Trinamool Congress against the acquisition of farmland.

Who is the Trinamool Congress? According to Wiki, largely defectors of the Indian National Congress, the party of Nehru and Gandhi. They are notorious in their usage of bangla bandh, or short-term general strikes, to make their political points in a region that is dominated by the Indian communists. This party, the CPI(M) or Communist Party India (Marxist), runs the region as its own fiefdom.

It's a strange world when the communists try to get capitalists to invest and are rejected by farmers.

West Bengal, where this is all going down, is the most heavily populated state in India, with less than 3% of the land area and close to 9% of India's population. While heavily agricultural, it is known for militant unions and communist-led governments. More relevantly, the CPI(M) was responsible for the Nandigram violence, where basically farmers had their land expropriated for a chemical factory that led to violence that left 14 dead and 70 hurt as 4000 police cleared farmland at the orders of the CPI(M). But we're not talking here of moving a few farmers, but rather disrupting 40 000 lives: as mentioned, this is a heavily populated area.

So Tata's decision is not merely that of a corporation that doesn't want to be where it isn't wanted: it's also the decision not to get involved in a region where commercial interests trump politics and where the purported leading elite of the downtrodden masses are actively involved in the exploitation of those same masses: the capitalist exploiters of the poor downtrodden masses are those protecting the same from their purported leading elites. Investments are canceled and written off because the safety of the workers cannot be guaranteed.

It's a strange world indeed.


When investing overseas, it pays to do your homework...

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