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Ratan Tata, one of India's best regarded industrialists, has dismayed many people by deciding to shift the Nano car factory from Singur in West Bengal to Sanand near Ahmedabad in Gujarat.
The agitation against land acquisition at Singur, led by Mamata Banerjee, cannot alone explain the choice of Gujarat. For one, the scope to explore alternatives to the existing land acquisition formula wasn't exhausted. Some interesting alternatives were proposed, which would have marginally raised the project's costs, but significantly increased the compensation paid to farmers and sharecroppers.
These include pursuing solutions already under discussion, such as returning a part of the land from the project area to the owners. Alternatively, a modest land royalty equivalent to one-quarter of one percent of the sales of the Nano car would annually generate Rs 1.25 lakh (Rs 125,000) an acre for landowners.
Also proposed was higher compensation for land by raising the price of the promised 'one lakh-rupee' car by Rs 10,000, which would have made the project more acceptable. The Tatas didn't pursue these ideas.
For another, many state governments wooed Tata Motors [Get Quote] with lucrative incentives. It's not clear if Gujarat's offer was more attractive than the concessions proposed by Maharashtra, Karnataka, Andhra Pradesh or Uttarakhand, which would minimally have to match the super-favourable treatment they got in West Bengal -- a total subsidy estimated at Rs 850-900 crore (Rs 8.5-9 billion), or half the entire cost of the project!
It appears that the Tatas opted for Gujarat not so much for specific concessions, as because they too were taken in by Chief Minister Narendra Modi's image as a dynamic, no-nonsense, pro-business leader, besides being attracted to what the Bharatiya Janata Party celebrates as the 'Gujarat Model' of development, based on rapid haphazard industrial expansion at high human-rights and environmental costs.
They were confident that Modi's ruthlessness would ensure the project's 'smooth' implementation and profitability.
In addition, Tata may have been influenced by what he terms Gujarat's 'intangibles' -- policy continuity, a 'peaceful' industrial climate (assured by Modi's repressive labour policies), good infrastructural backup, Sanand's location close to the planned Mumbai-Delhi industrial corridor, and law and order 'stability' (however despotically this might be imposed by an authoritarian communal government).
At any rate, by deciding to go to Gujarat, Tata has bestowed unprecedented legitimacy and respectability upon Modi and his ghastly brand of politics. Nothing expressed this as eloquently as the mutually admiring body language in the two men's interaction and by Tata's distinction between the 'Bad M' (Mamata Banerjee) and the 'Good M' (Modi).
Last year, Tata had famously told businessmen: "You are stupid if you are not in Gujarat." Until the Nano project, the Tatas had limited investments in Gujarat through Tata Chemicals [Get Quote] in Mithapur.
Now, by relocating the Nano factory, Tata has finally put his imprimatur on Modi's 'leadership' of Gujarat -- although Modi presided over a terrible pogrom of Muslims in 2002.
By shifting the Nano factory, Ratan Tata has behaved like any other businessman in search of low-risk investments and high profits. From within the logic of profit maximisation, it's hard to fault him.
But the House of Tatas is meant to be different: it's seen as an enlightened, liberal-minded and ethical industrial group driven by considerations larger than profit alone. Ratan Tata's admirers believe he 'can do no wrong.' They also attach an almost mystical value to the Nano car as a great managerial and technological achievement, to be priced at the magic figure of Rs 1 lakh -- and destined to become a 'dream machine' for the middle class, or a noble kind of 'public good.'
However, the Nano is likely to have serious safety and maintenance problems because its design cuts many corners and uses flimsy materials instead of solid, durable ones. It's doubtful if it'll be a real 'achievement' and meet elementary safety and emission norms while maintaining the one lakh-rupee price.
It may turn out the opposite of a public good by choking our roads, stoking rampant consumerism and resource waste, discouraging public transport, and becoming a social and environmental liability.
However, the larger premise about the Tata Group being different or exceptional is based upon three propositions: it pioneered Indian industrialisation through Empress Mills and Tata Iron and Steel Co in the 19th century, and continues to play a highly innovative role under Ratan Tata as a professionally managed conglomerate; it's driven by philanthropic motives and has an unblemished labour relations and environmental record; and, finally, that it's a model of corporate social responsibility (CSR), which averts aggressive practices.
The first half of the first proposition is undoubtedly true. The Tatas indeed established textile and steel production as swadeshi enterprises, collecting subscriptions from the middle class. They also set up many other new industries, including chemicals, electronics and software.
But there has been some stagnation in their in-house innovative activity, and the group has increasingly expanded through mergers and acquisitions, as in the $13-billion Corus takeover and the Jaguar-Land Rover deal.
Ever since he became chairman of the House of Tatas in 1991, Ratan Tata has tightened his family trusts' hold on the group's companies. Under the legendary JRD Tata, Tata Sons Ltd owned just 3 percent of their equity. Now, it holds a controlling share in most companies.
Tata's own record in failing to turn around electronics company Nelco in the 1970s and Empress Mills in the 1980s speaks for itself.
The Tatas' labour relations record is patchy. As historian Dilip Simeon has documented in his book, The Politics of Labour under Late Colonialism (Manohar, 1995), the Tatas tarnished the record in the late 1920s and 1930s by promoting communal unions and employing goondas and strike-breakers. Nelco too was closed down in the late 1970s as a result of a strike and prolonged lockout.
In recent years, many Tata companies have got into serious environmental conflicts over projects in Maharashtra, Gujarat, Jharkhand and Orissa.
The Tatas admittedly run a number of good charitable trusts. But as far as CSR goes, Ratan Tata has been lobbying on behalf of Dow Chemicals being allowed to escape its responsibility for the aftermath of the Bhopal disaster as the heir of Union Carbide, which it took over.
He wants Dow to be freed of its legal liability to clean up the contaminated Bhopal plant site, which has poisoned water supply and affected 25,000 people living in the vicinity.
Under Ratan Tata's stewardship, the Tata Group has turned extremely aggressive and acquisition-oriented. The Corus takeover has put it into a debt of $7.4 billion. But that didn't stop the Tatas from taking over Jaguar-Land Rover. Labour unions in these acquired companies feel less than assured of job protection and good industrial relations.
On top of this comes Tata Motors' decision to move the Nano factory to Gujarat. Implicit in this is an endorsement of Modi's style of governance and, above all, a sanctification of his viciously communal politics.
In effect, the decision will be interpreted as an invitation to forget the haunting reality of the massacre of 2,000 Muslims in 2002 sponsored by the state. This was the worst carnage of its kind in Independent India -- and a major assault on secularism and democracy, from which Gujarat has still not recovered.
Indeed, the victims of the carnage continue to be denied justice and live in fear and insecurity, with scores of cases under TADA and POTA and all manner of harassment, including fake encounters in which DCP Vanzara has been involved.
The recent report of the Nanavati Commission has only added insult to injury by declaring the burning of a train coach at Godhra a planned conspiracy instead of an accident, and by giving a clean chit to Modi. (For a detailed critique of the Nanavati report by Ahmedabad-based lawyer-activist Mukul Sinha, visit www.nsm.org.in )
Tata's endorsement of Modi is in line with a long process of the Indian industrialist class gradually reconciling itself with Modi-style Hindutva, helping erase the memory of the Gujarat pogrom, and 'normalising' Hindu communalism.
This is happening at a dangerous moment in India's evolution, when Hindutva attacks on the religious minorities are rising, whether in Orissa and Karnataka, or in Madhya Pradesh and Maharashtra, while the minorities face ethnic cleansing or are victimised in the name of fighting terrorism.
The Indian State has shown no will to stop this and bring the culprits to book by upholding the law of the land.
As the latest National Integration Council meeting showed, even Naveen Patnaik is willing to implement a ban on the Bajrang Dal, if the Centre orders one. But will the Centre muster the courage, or duck the problem of communalism like the Tatas have done?
India's survival as a pluralist secular democracy hinges on this issue.
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