A big blow for Modi? Nano wants to exit Gujarat!

As sales of Tata Nano continue to paint a sorry picture for Tata Motors, the carmaker has asked Gujarat government to extend sops to other car models, which it plans to manufacture from Gujarat’s Sanand.

This demand has put the state government in a tight spot. If the Gujarat government gives preferential treatment to Tatas, other carmakers like Ford and Maruti will also demand the same.

The worry of the state government shot up after General Motors exited Maharashtra.

If Tata Nano drives out of Gujarat, this will come as a setback to the state government, which is already under dark clouds due to Patel community’s reservation demand.

"The company recently approached for availing the same soft loan benefits for models other than Nano. As per the agreement, the incentives were specific to Nano only. The company is currently getting soft loan amount at 230% of the gross VAT paid. Other auto companies get 100% of VAT refund," said Arvind Agrawal, additional chief secretary, industry & mines department, Gujarat.

Tata Motors demand comes in the backdrop of meagre sales of Nano, which came to Gujarat in 2008.

Nano sales are not even 10% of the planned capacity of 250,000 cars per year.

In 2014-15, its sales were just 16,903 units and in the last three years, Tata Motors has been given Rs 479.50 crore loan against VAT paid by the company.

Reportedly, a claim of another Rs 150 crore loan against VAT is pending.

Meanwhile, Tata Motors said they continue to evaluate best suited locations for existing and new products and work closely with relevant regulatory and government stakeholders for necessary supports.

(Image: Indiatimes)