SUJAN DHUNGANA

KATHMANDU, Aug 31: Tata Motors has scrapped its plan to build an automobile assembly plant in Nepal.

Officials of Sipradi Trading - the authorized distributor for Tata vehicles in Nepal - told Republica that the country´s investment climate failed to impress officials of Tata Motors. “They scrapped the plan citing lack of sufficient land, regular water and power supply and government support,” an official of Sipradi Trading said.

Tata Motors has already decided to shift the project to Indonesia.



The Indian automobile giant had unveiled plan to open an assembly plant in Nepal about three years ago. It had also said that the plant would gradually expand its capacity and start manufacturing vehicles in Nepal itself. Sipradi Trading had even applied for a license for the assembly plant.

“Officials of Tata Motors had promised necessary support to us for preliminary works. But report of feasibility study conducted in Nepal failed to impress them,” Shambhu Prasad Dahal, CEO of Sipradi Trading, told Republica on Sunday.

According to Dahal, Tata Motors had planned to assembly Tata Ace in Nepal initially due to the strong demand for the vehicle in South Asian countries including India, Sir Lanka and Bangladesh. “Our team even visited Tata´s industrial site in Himanchal Pradesh for further industries. Officials of the plant told us that at least 60 to 100 bighas of land would be required for the plant,” he added.

But Tata Motors faced hurdles in land acquisition.

“We visited different parts of the country to search appropriate land for the plant but couldn´t find even a single plot spreading over 60 bighas,” Dahal said, adding: “Though we found some plots, they were fragmented and had multiple owners. Also we faced problem in land acquisitions due to unsupportive government policy and pressure from local community.”

Dahal also criticized the government for not becoming supportive to the private sector and foreign investors. “In other countries, government encourages private and foreign investors. We didn´t find any such thing here,” Dahal regretted.

He, however, hinted that Tata Motors would think of investing in Nepal if the country assures them on investment security.

Along with the assembly plant, Tata Motors had also to set up an automobile training school within 2014 to produce trained hands for its plant.

The assembly plant and training school could have created 50,000 jobs, according to Dahal.

Tata Motors has assembly plants in different countries like Bangladesh, Ukraine, Kenya and Russia in joint venture with its local distributors and investors. For example, Tata owns 40 percent stakes in its Bangladesh-plant. Remaining shares are held by local investors.