Gujarat not to extend Nano benefits to Tiago hatchback

Tata Motors' latest hatchback, Tiago, is unlikely to benefit from the incentives offered for Nanos produced at its Sanand factory by the Gujarat government.

"The agreement signed between the company and the state government mentioned the Nano, and a government resolution was issued with regards to the incentives offered," said an official.

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Officials said the incentives for the Sanand project were because the Nano was touted as the world's cheapest car.

These included a soft loan and a cap on the amount payable to the state government on the sale of the Nano and its parts. The loan agreement was signed during 2012-13 and so far Rs 400-450 crore has been disbursed to Tata Motors.

Tata Motors is losing out because Nano are languishing. The Tata Motors Sanand factory is making 150-200 Tiagos a day and 100 Nanos. If the plant had been producing 250,000 Nanos a year, the benefit would have worked out to Rs 4,000 per car.

Government sources said Tata Motors had approached the state government last year seeking extension of the benefits to other vehicles manufactured at the plant.

A mail to Tata Motors did not draw a response till the time of going to press.

No car maker that has set up a plant in Gujarat after Tata Motors has been offered a soft loan.Ford India, Maruti Suzuki, Honda Motorcycle and Scooter and Honda Cars India have plants in the state.

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WHAT TIAGO STANDS TO LOSE

• Tata Motors was offered soft loan at 0.1% interest pa for 230% of the 1st phase investment
   
• Initial investment planned by the company pegged at Rs 2,900 crore
   
• Soft loan works out to be Rs 6,669 crore
   
• Loan amount was capped to the gross Value Added Tax and Central Sales Tax payable to the Gujarat govt on sale of Nano
   
• Loan would repayable in monthly instalments, starting from the 21st year of commencement of sale of first Nano
   
• Tata Motors plant relocated to Gujarat from West Bengal in October 2008
   
• Plant started commercial production from June 2009