Tata Nano plant received Rs 456 crore loan from Gujarat government

Back in 2009, the Tata Motors had signed an agreement with the Gujarat government under which the company was permitted to set up its Nano car manufacturing plant in Sanand, Gujarat. The government had then provided the Indian automaker with loan worth a whopping Rs 456 crore.

According to the figures provided in the Gujarat State Assembly by Chief Minister of the State, Anandiben Patel, who also handles the industry portfolio, the Gujarat government had provided Tata Motors with Rs 167.20 crore in 2012-13, Rs 252.34 crore in 2013-14 and Rs 37.25 crore in 2014-15 (as on January 31, 2015).

These figures were provided in a written reply by Patel to a question posed by Congress MLA Shaktisinh Gohil, where the member had sought details of the loan provided to Tata Motors under the agreement between the automobile company and the state government.

Tata Motors’ Sanand plant has an installed capacity to make 2,50,000 cars per year. The capacity remains vastly under utilised with the Nano’s sales averaging a little over 1,000 units per month.

Tata Motors is hence looking forward to produce other automobiles at its plant. To meet this requirement, the company is looking to make amendments to the so-called state support agreement it signed with the Gujarat government.

Attempts to boost sales of the Nano by repositioning it as a smart city car aimed at youngsters, replacing the ‘cheapest’ tag and equipping it with new features such as power steering, haven’t quite worked.

The Gujarat facility is more modern and better equipped to manufacture next-generation cars compared with Tata Motors’ existing facilities. The company is hence looking forward to start manufacturing other cars at this plant to turn its fortunes.