Tata Motors says Gujarat gave it loan, not grant

Tata Motors, responding to Congress vice-president Rahul Gandhi's charge that the Bharatiya Janata Party government in Gujarat extended undue favours to it worth Rs33,000 crore for its car manufacturing facility at Sanand, on Thursday said it got only Rs584.8 crore – and that as a loan, not a grant.

Without naming the Congress, the company said in a statement that the investor-friendly environment created by the Gujarat government encouraged Tata Motors to set up its manufacturing plant in Sanand, with a long-term vision to make it a leading automotive hub.

"Given the scale of the project and its potential to drive growth in the state, the Gujarat government offered Tata Motors an incentive package in the form of a loan (not a grant), which is to be repaid to the state government as per the loan agreement executed," said the statement.

The loan given to Tata Motors is from taxes paid by the company. Until now, the state government has given a loan of Rs 584.8 crore to Tata Motors, it said.

The company also claimed that after the establishment of the plant at Sanand, "there has been a spurt in economic activity and growth in employment (direct and indirect) within the state, making Gujarat one of the key auto hubs within the country with huge employment generation".

It did not mention that the Nano car, for which the plant was primarily set up, bombed in the market and its production has been virtually discontinued.

The project has also given rise to capital investments, which has further resulted in the development of incidental industrial activities and employment generation in small and medium scale industries, the statement claimed.

Rahul Gandhi has been attacking Prime Minister Narendra Modi in Congress rallies for the upcoming elections, alleging that the state gave away Rs33,000 crore for the Nano plant in Sanand, while the previous United Progressive Alliance government gave a similar amount to the MNREGS rural employment scheme.

After the Tata Motors statement, the Congress again hit out at the government, saying the loan given to the ''poor'' Tatas is at 0.01 per cent interest, while the interest levied on farm loans is 18 per cent. ''Are farmers rich and Tata poor that the Gujarat government is charging high rate of interest from the farmers?'' Congress's spokesperson Randeep Singh Surjewala asked.