Tata Motors today signed an agreement with the Gujarat government for setting up its 'Nano' small car project in Sanand, ending speculation over the company relocating the Nano plant from Singur in West Bengal to places in almost all states from Uttarkhand in the north to Tamilnadu in the south.

The project will be set up in Sanand, nearly 25 km west of Ahmedabad, on the land of Anand Agriculture University (AAU). The AAU had 2,220 acres of land at the site, which has been transferred to the state government.

The integrated project, comprising the mother plant and the vendor park, will come up on an area of about 1100 acres. The plant, to begin with, will produce 250,000 cars per annum. The capacity is expandable up to 500,000 cars per annum.

The project, including Tata Motors' plant, vendor facilities and service providers, will together generate over 10,000 direct and indirect jobs.

Tata Motors, which had explored many locations after leaving Singur, finallay chose Sanand for locating the project for production of the Rs1 lakh small car as the area is just 25 km form Ahmedabad and is on the National Highway.

While awaiting the Sanand plant's completion, Tata Motors will explore the possibility of manufacturing the Nano at its existing facilities at Pune and Pantnagar, and launch the car in the last quarter of this financial year.

''The site in Gujarat, already under the possession of the state government, will help Tata Motors establish a new dedicated mother plant with the shortest possible time lag and least possible incremental project cost. This is Tata Motors' maiden venture in Gujarat, and will broad-base the company's manufacturing footprint. We are happy to contribute to Gujarat's strong industrial progress by creating an auto cluster, which will have a cascading impact on the state's economy,'' Ratan Tata, chairman of Tata Sons and Tata Motors, said.

Several states have been trying to woo the small car project with various incentives, including cash subsidy of up to Rs300 crore offered by the Andhra Pradesh. Maharashtra, Karnataka and Tamilnadu have also been offering various incentives for the Tata project.

It was finally Gujarat government's serious marketing of the state as the most investor-friendly state that swung the decision in its favour. Chief minister Modi has all along been marketing Gujarat as an ''investor-friendly state.''

The company had received overwhelming support from several states for relocating the plant. After examining various sites in these states and carefully evaluating offers from the respective governments, the company has concluded that the site at Sanand and the offer from the Gujarat government was in the best interest of the project, Tata Motors said in a release.